U.S. debt hits $40 trillion: how to support concerned clients

Now that U.S. debt has reached $40 trillion, some clients may be concerned about its impact on their retirement portfolios and overall financial situation.

That’s why advisors need to step in and help them understand that success goes beyond investment returns or specific savings targets.

“Instead, it requires a broader approach that considers income, investments, insurance, taxation, and flexibility as interconnected parts of a retirement strategy,” said Jared Nepa, head of insurance distribution at Lincoln Financial.

While it’s easy for news headlines to drive long-term financial decisions, clients and advisors must work together to focus on what they can control.

“The primary goal in today’s economic environment must be focused on an asset allocation strategy that can weather uncertainty,” Nepa explained.

Get to the root of the worry

When a client seems worried about the U.S. debt situation and broader economic conditions, it’s important to dive deep into the “why.” This way you can move the conversation from what Congress might do to what the client can do.

For instance, are they concerned that government debt will drive up interest rates and interfere with their ability to buy a new home? Or are they questioning their retirement?

It’s difficult to address a client’s needs and recommend the next best steps when it’s unclear why they’re hesitant in the first place.

Once you understand a client’s perspective, you can determine whether their plan needs adjustment or whether additional products may be appropriate.

“Often, the plan already accounts for the concern. When it doesn’t, however, you've found real work to do,” explained Mark Clark, founder and financial advisor at Prestige Advisors.

Focus on what clients can control

First, reinforce the fact that while the U.S. debt crisis is unfortunate, it’s out of the client’s hands.

“I tell clients that $40 trillion is Washington's balance sheet, not theirs. What we can control is their own: their spending plan, their tax picture, their cash reserves and how their investments are built,” Clark said.

Then, explain that the debt situation shouldn’t upend their plan, but it is a fair reason to stress-test it.

For retirement income, that might mean checking how the plan holds up if taxes or inflation run higher than assumed, and whether the client has more than one type of account to draw from. Tax diversification matters when nobody knows future rates.

For life insurance, review existing policies before considering anything new. Illustrations are hypothetical; non-guaranteed elements can change, and loans and withdrawals reduce values and may have tax consequences.

In some cases, adding products like annuities and life insurance coverage makes sense.

“Life insurance and fixed annuities, for example, are becoming more imperative in the plan process because they can help address risks that fall outside of market performance, while income and investment strategies help support long-term financial goals,” Nepa said.

Clients and advisors should never let a headline make a long-term decision.

“Moving everything to cash or chasing a single ‘debt-proof’ idea can feel protective, but it often swaps one risk for another, such as missing a recovery, triggering taxes or locking in a loss,” Clark explained.

Ultimately, the key isn't to predict every economic shift. It's to build a strategy resilient enough to adapt, regardless of what comes next.

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