Defaulting on debt isn't the only way to scare investors
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Defaulting on debt is not the only way to scare investors from marketplace. I'm Sabri Beneshour in for David Brancaccio. As the tax and spending bill continues to wind its way through Congress, questions about the U.S. debt have not gone away. Over the weekend, Treasury Secretary Scott Besant said the U.S. would never default on its debt.

But the U.S. doesn't have to actually default in order to lose the confidence of investors, who would, by the way, in turn charge the U.S. more to borrow. Julia Coronado is founder of Macro Policy Perspectives and a professor at the University of Texas, Austin. It's true that the U.S. can always pay the treasury debt that it owes. It has a printing press. It can create money. The question really is around what will the value of those dollars be when you get them back?

There's really no fiscal discipline, no end in sight to large and rising deficits that the U.S. is running. And there's also a lot of

sort of breakdown in rule of law and transparency and just the rising risk of the U.S. as a counterparty. So they're doing things like threatening to tax Treasury interest, which is a form of default. It's a form of saying, I'm not going to give you back what you expected to get back when you bought this Treasury security. If the U.S. were to just print money to pay its debts, what's the problem with that?

Well, if you do too much of that, that can become inflationary. And you also run the risk of losing the confidence of people who buy treasury securities and they may choose to sell them. And that would put upward pressure on bond yields and downward pressure on your currency. So you could just lose the

the confidence that people have in holding dollars. So it's a very risky strategy. It's a temptation that many governments have succumbed to. Sometimes we do that effectively during crises. So it's a matter of what is the overall system for managing your money and is it something that people have faith and trust in? I was Julia Coronado there, founder of Macro Policy Perspectives. Macro Policy Perspectives

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With few exceptions, professional planners recommend retiring with no debt. Yet, the share of households over age 65 with debt is up sharply since the late 1980s. Things might get even harder for the coming generation of retirees, Gen X. The oldest Gen Xers are 60 years old, and by several measures, they're deeper in debt than other generations.

With the latest in our series, Buy Now, Pay Later, here's senior economics contributor Chris Farrell. Saving for retirement isn't easy, but finding money to set aside for our elder years is especially hard for Gen Xers.

Many are taking care of both children and aging parents. This is a generation that's really caught between caring for aging parents and raising kids and putting kids even starting into college at this point. Carrie Hannon is a personal finance columnist and co-author of Retirement Bites, a Gen X guide to securing your financial future. They came into the workplace when retirement 401ks were just getting started.

While many households have little to no retirement savings, those Gen Xers with savings have money and plans like 401ks. These plans weren't easy for workers to manage when relatively new, and retirement savings are exposed to the risks of market volatility. They don't have a backlog of savings, and what's happened for them is debt. Despair is not an option, of course. There are steps that can benefit workers nearing retirement

with little savings and lots of debt. - So I think that the goal here is to get to retirement without debt or with a manageable amount of debt and to be able to generate the highest amount of guaranteed lifetime income, namely social security. So I think there are some steps that people can look at towards that goal.

They're not necessarily easy to do, but I think these are the realistic things that are worth thinking about. Think about it as sort of a menu of options. Mark Miller is a journalist and author of Retirement Reboot, Common Sense Financial Strategies for Getting Back on Track. What are some of the key items on that menu of options? Financial planner Tanya Brinson emphasizes the need to gather accurate household financial information. I recommend...

First, to get a realistic snapshot of your debt. What do you owe and what are those interest rates? Then create a realistic budget.

you know, one that focuses on covering those essentials like housing, food and health care. Miller adds, then ask yourself, what expenses can be cut? Do everything you can to scrub your expenses. Take a look at the large recurring items that you're spending on every month and ask yourself if there's some things there you can do without for a while while you try to right the ship.

Working longer can also shore up household finances. When I say longer, I mean longer than you might have initially planned. I don't mean that to say never retire, but working longer can really be helpful in a number of ways. It can help you push off your claim of Social Security, which can generate higher monthly benefits.

When I say push off, I mean that income from a job can pay living expenses while you wait to file for Social Security. And it just generates income from the job that perhaps could be used to pay down debt and maybe to start to accumulate some savings.

Small steps like these build on one another, reinforce each other, and gradually improve household finances. What are some things you can do right now to take control and get financially fit? Because that is going to be the ticket to having a healthy retirement, and not necessarily wealthy, but a healthy one. The best time for older adults to start tackling their debts is right now. I'm Chris Farrell for Marketplace.

Our Buy Now, Pay Later project is in partnership with Next Avenue, a nonprofit news platform for older adults produced by Twin Cities PBS. In New York, I'm Sabri Beneshour with the Marketplace Morning Report. From APM, American Public Media.

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