The Number Is Big. The Implications Are Bigger.
The U.S. national debt recently crossed $40 trillion — a figure so large it’s almost impossible to visualize. If you spent one dollar every second, it would take over 2,700 years to spend it all. But beyond the staggering size, there’s a practical question that matters far more to anyone approaching retirement: what does this mean for your money?
The short answer is that government debt gets repaid one way or another — and the most likely mechanism is higher taxes. That makes your pre-tax retirement accounts more exposed than most people realize.
Today’s Tax Rates Won’t Last Forever
The 2017 Tax Cuts and Jobs Act reduced tax brackets significantly, but those provisions are set to expire. When they do, rates go up automatically — and against a backdrop of $40 trillion in debt, extensions are far from guaranteed.
That makes right now an unusually important window. If your retirement savings are sitting in a traditional IRA or 401(k), every dollar in those accounts will eventually be taxed at whatever rate Congress sets in the future. Converting some of those funds to a Roth IRA today means locking in today’s rates — before the window closes.
RMDs Are a Tax Bill You Didn’t See Coming
One of the most overlooked risks in retirement planning is the Required Minimum Distribution. Starting at age 73, the IRS requires you to withdraw a percentage of your pre-tax retirement accounts each year — whether you need the money or not. Those withdrawals are taxed as ordinary income.
The bigger your balance grows, the larger the RMD becomes. Large distributions can push you into a higher tax bracket, increase Medicare premiums, and trigger taxes on Social Security income. The time to reduce that exposure is before you retire, not after.
Gold, Income, and the 5-Year Window Before You Retire
Matt Dages, CFP® and founder of Bright Wealth Management, regularly addresses questions about gold as a retirement hedge. His position is measured: a small allocation can reduce volatility and provide some inflation protection, but gold produces no income. In retirement, income is what pays your bills — not the price of a commodity.
The five years before retirement are where the real planning happens. That means stress-testing your portfolio, projecting your RMDs, reviewing your Social Security timing, and identifying guaranteed income sources that will cover your non-negotiable expenses.
Build a Plan That Works in Any Tax Environment
The national debt isn’t going away. Tax increases are a reasonable expectation, not a worst-case scenario. What you can control is how your accounts are structured, when you convert, and how you sequence withdrawals in retirement.
As Matt Dages puts it — control what you can, and plan for what you can’t. That’s the foundation of a retirement strategy built to last regardless of what Washington does next.
Matt Dages is a fiduciary financial advisor and founder of Bright Wealth Management, based in Phoenix, AZ. He specializes in retirement income planning, tax strategy, and wealth management for individuals approaching and in retirement. Learn more at brightwealthmanagement.com.