As September marks National 401(k) Day every year, it is important to understand the danger we face in losing our nest eggs if our nation’s debt crisis is not brought under control.
From a young age, we are told to think about our future and invest in our 401(k)s that our employers match in order to save for our retirement. For most American workers, traditional company pensions are a thing of the past, replaced by 401(k). But what happens if the very platform that was supposed to be our long-term financial security plan is not so secure after all?
Most 401(k)s are invested in the stock market. If the United States were to default on the trillions of dollars of debt it carries, individual portfolios would plummet in value and dividends would stop. Worse yet, these portfolios could become worthless in a default scenario.
The big picture – the very future of our country – is dependent on a long-term sound economy.
According to recent financial statements prepared by the U.S. Treasury Department "the current fiscal path is unsustainable," and every federal agency agrees that on Sept. 30th, our interest-bearing debt will be around $33 trillion dollars.
The interest expense next year will be over $1 trillion, for which we get nothing other than just keeping up with the interest payments. Total obligations, including Unfunded Obligations, will be north of $122 trillion. The Congressional Budget Office (CBO) projects an additional $20 trillion of interest-bearing debt and my estimate of interest expense is $2 trillion on over $50 trillion of debt (assuming a 4% interest rate) based on current policies, assuming no new Federal programs.
But what are the chances of that?
The CBO projects an additional $116 trillion of interest-bearing debt in 30 years. No need to worry about that; the country will fail before we get there as we simply cannot support that much debt.
Social Security and Medicare Trust funds will be exhausted within 10 years, and benefits are required by law to be cut at that time, estimated to be 26% cut for Social Security and 10% for Medicare.
If this scenario was playing out in the private sector, it would be called a classic Ponzi Scheme since there is no way to pay the debt service except by borrowing more and more which perpetuates the cycle.
The debt to gross domestic product (GDP) ratio has risen from around 35% when former President Bill Clinton left office, to almost 130% today, and it is forecast to go much higher. Clinton was the only president in my adult life to balance the budget and run a surplus. Every president and Congress since has just made matters worse and worse.
My message is simple: quit worrying about the short-term swings in your 401(k), and start worrying about our nation’s fiscal survival. If we don’t do this, it is highly unlikely we will have anything of value left in our retirement plans when we need those resources most.
We elect the representatives on both sides of the aisle who are putting our fiscal health at risk — for us, our children and grandchildren. We need our representatives to be fiscally responsible, and they are not.
We need to do something about it. We need each person to raise their hand and voice their opinion to their elected officials and remind them that if they will not fix the problem, then we will vote for someone who will. We inherited a country that works. Shame on us if we sit by and do nothing while we watch our children’s futures burn in the fiscal fire.
_______________
Leslie A. Rubin, CPA, is the CEO of Main Street Economics, a non-profit educating Americans about the seriousness of the nation’s debt crisis. Under his leadership, the organization has helped to educate Americans about the unsustainable fiscal path the United States is currently on and the urgency of stabilizing the debt before we crash into the iceberg. Visit https://www.mainstreeteconomics.org/ and click “Contact Congress” to let them know that we demand a fix to this growing issue.
© 2025 Newsmax Finance. All rights reserved.