How national debt threatens clients' retirement and home plans

America's national debt has surpassed $39 trillion, or roughly $116,000 for every man, woman, and child in the country, and a new report from the Conference Board warns that financial advisors should be preparing their clients for the concrete, real-world consequences that are already taking shape.

The report examines how the federal fiscal trajectory is translating into higher borrowing costs, threatened retirement income, and mounting pressure on families across four key areas: college financing, homeownership, Social Security, and small business growth.

"Higher debt can mean higher borrowing costs for families and businesses, fewer resources for national priorities, and greater uncertainty about programs Americans depend on in retirement," said David K. Young, president of The CEO Center, which partnered with the Conference Board on the research.

A debt load growing faster than the economy

Under the Conference Board's baseline scenario which assumes annual deficits of 6–7% of GDP, the national debt is projected to reach 154% of GDP by 2036. In a higher-deficit scenario, that figure climbs to 180%.

The US government now spends more annually on debt interest than it does on national defense, according to the report.

Those numbers carry direct implications for the clients that independent financial advisors and wealth managers serve daily. Interest rates on 10-year Treasury bonds are projected to reach approximately 4.1% by 2036 under the baseline, rising to 4.6% in the bad-case scenario. And in a modeled one-week government default in 2029, rates could spike to 6.9% before settling at around 5.6% over the longer term.

The debt picture is playing out in real time in the bond market. The yield on 10-year US Treasurys stood at 4.6723% on Thursday morning (August 20), according to CNBC, while the 30-year yield climbed to 5.2256%, levels not seen since before the 2008 Global Financial Crisis.

Yields had pulled back sharply the previous session after Treasury Secretary Scott Bessent announced the department would double the size of its debt repurchases, concentrating the intervention at the long end of the yield curve, a move that sent the 30-year yield down more than 10 basis points in a single day.

The historic announcement came as total US government debt crossed $40 trillion. The temporary relief underscores the volatility now embedded in the rate environment and reinforces the Conference Board's warning that sustained fiscal deficits leave borrowing costs structurally elevated.

What it means for homebuyers and borrowers

For a family of four purchasing a $600,000 home, the difference between fiscal outcomes is significant.

Under the better-case scenario in the Conference Board report, where the deficit is reduced to roughly 3% of GDP, housing costs could fall by 1.8%, saving approximately $53,000. Under the bad-case scenario, the same purchase could cost around $55,000 more. For clients considering buying a home in ten years rather than five, those swings widen to 3.7% in either direction.

Student debt compounds the picture. The Conference Board notes that Americans currently owe $1.87 trillion in student loans, with 10.3% of loans 90 or more days delinquent as of the first quarter of 2026, up from 7.7% a year earlier.

In an extreme interest rate shock scenario where rates double, student loan payments could increase by as much as 61%, adding roughly $310,000 to total repayments over a borrower's lifetime.

Social Security: A 2032 deadline

Perhaps the most urgent finding for advisors counseling clients approaching or in retirement is the report's Social Security timeline. The primary Trust Fund is projected to become insolvent in 2032, based on Congressional Budget Office projections cited in the report.

If Congress takes no action and allows benefits to equal only what the Trust Fund can pay, a retiree currently receiving $2,100 per month could see their benefit cut by $173 monthly beginning in 2032, with losses exceeding $700 annually thereafter.

Restoring full solvency through Trust Fund backfilling alone would require $2.7 trillion between 2032 and 2036, further widening deficits unless offset by new revenue or spending cuts.

The Conference Board recommends a combination approach: gradually raising the full retirement age to 69, adjusting cost-of-living formulas, implementing modest means testing for high-income beneficiaries, and raising or eliminating the cap on income subject to payroll taxes.

Small business clients face outsized risk

The report's findings for small business owners are also concerning.  Two business loans totaling $250,000 would cost approximately $105,000 more in total payments under the bad-case fiscal scenario, a 7% increase.

Under an extreme interest rate shock, that figure balloons to more than $1 million in additional costs, representing a 67% increase over baseline projections.

Context adds to the concern: small business profitability fell 1.3% year-over-year as of April 2026, according to the report, while gasoline spending among small businesses rose 31% over the same period — a sign that cost pressures are already biting before any further rate-driven deterioration.

The policy path forward

The Conference Board calls on Congress to establish a bipartisan fiscal commission empowered to stabilize the debt-to-GDP ratio at a sustainable level (the report suggests 100% as a target) and to develop reform plans for Social Security and Medicare that are subject to floor votes.

Additional recommendations include extending Congressional Budget Office projections from 10 to 25 years and establishing statutory targets for reducing debt to 70% of GDP over the longer term.

The report stops short of advocating any single political approach, but its message is clear: the longer fiscal decisions are deferred, the more constrained the range of outcomes for American families, businesses, and retirees will become.