America Is Insolvent: What the Treasury’s Report Means for Your Retirement Savings
In March 2026, the US Treasury published its annual “Financial Report of the United States Government.” It barely got mentioned by anyone.
But two of the country’s most respected economists went through the whole thing and published their findings in Fortune. Their conclusion was blunt: the US government is insolvent.
So what does that actually mean, and why should anyone with retirement savings care? The answer comes down to a rule in finance that almost nobody talks about. When a debtor becomes insolvent, the people it owes money to move to the front of the line. Everyone else moves to the back. Here’s what the Treasury’s own numbers show, and what they mean for your money.
What the Treasury’s report tells us
The two economists are Steve Hanke, a professor of applied economics at Johns Hopkins University, and David Walker, the former Comptroller General of the United States. Walker, it’s worth noting, spent a decade as the nation’s chief accountability officer. Reading the government’s books was literally his job.
In their Fortune analysis, they lay out the numbers from the Treasury’s consolidated financial statements. As of September 30, 2025, the federal government held $6.06 trillion in total assets against $47.78 trillion in total liabilities. That’s a negative net position of $41.72 trillion, and it means the government’s liabilities are nearly eight times the value of everything it owns.
The hole is also getting deeper fast. The balance sheet deteriorated by almost $2.07 trillion in a single year, driven by a $2 trillion jump in federal debt and interest payable, which now stands at $30.33 trillion.
And here’s the part that should get every American’s attention. That $47.78 trillion doesn’t include the unfunded promises behind Social Security and Medicare. Those sit in a separate, off-balance-sheet disclosure called the Statement of Social Insurance. The 75-year shortfall for those programs surged by $10.1 trillion in one year, from $78.3 trillion to $88.4 trillion.
Add those promises to the official liabilities, and total federal obligations exceed $136.2 trillion. That’s roughly five times the entire annual output of the US economy.
One more detail worth knowing. The Government Accountability Office has refused to certify the government’s financial statements for 29 consecutive years, mostly because the Department of Defense can’t produce books that pass an audit. So even these staggering numbers come with an asterisk.
Trillion-dollar figures are hard to relate to, so Hanke and Walker shrank them down. Divide everything by 100 million, and federal finances look like a household that earns $52,446 a year, spends $73,378, holds $60,554 in assets, and sits under $1.36 million in debt and unfunded promises.
If your neighbor ran his finances that way, you’d call him broke. By any accounting standard, you’d be right.
What does it mean to be “insolvent”?
Insolvency has a precise definition in finance. A person, company, or government is insolvent when total liabilities exceed the fair value of total assets. As this Wall Street Prep explainer on insolvency puts it, that’s the formal test, and the US government fails it by tens of trillions of dollars.
There are two flavors of insolvency. Balance sheet insolvency means your debts outweigh your assets. Cash flow insolvency means you can’t cover your obligations as they come due. The US fails the first test outright, and the second one is getting harder to ignore. In fiscal year 2025, Washington brought in $5.24 trillion in revenue and spent $7.34 trillion.
It’s also worth separating insolvency from bankruptcy. Insolvency is a financial condition. Bankruptcy is a legal process. An insolvent government doesn’t get liquidated like a failed business, but the condition still carries real consequences, and one rule in particular changes everything.
Here’s the part of insolvency that rarely makes the news. When a company becomes insolvent, the legal duty of its leadership shifts. Management is no longer required to act in the best interest of the shareholders. From that point forward, it must act in the best interest of the creditors. The people holding the debt take priority. The owners take what’s left.
Now think of America as that company. Who are the shareholders? You are. Every American who worked, saved, paid taxes, and built up a 401(k), an IRA, a TSP, or a savings account holds a stake in this enterprise.
And who are the creditors? Foreign governments holding trillions in Treasury bonds. Wall Street bond funds. Pension giants and financial institutions. The lenders that keep Washington’s borrowing machine running year after year.
If the US government is insolvent, and its own balance sheet says it is, then the people running the Treasury and the Federal Reserve face the same pressure as the management of any broke company. Their job quietly becomes keeping the creditors happy. That means keeping the bond market calm, keeping borrowing costs manageable, and keeping the debt rolling over. Your retirement savings sit nowhere near the top of that priority list.
How an insolvent government keeps paying its bills
At this point, the common objection kicks in. America prints the world’s reserve currency, so it can’t really go broke, right?
Technically, that’s true. Washington will never miss a payment, because it can always create more dollars to make the payment. Ray Dalio, founder of Bridgewater Associates, the largest hedge fund in the world, has warned that the US is in what he calls a “debt death spiral.” But as he explains it, the spiral doesn’t end in default. It ends with the central bank printing money to buy the government’s debt, and with what he calls the depreciation of money.
The creditors get paid in full. Every bond gets honored. But they get paid back in dollars that are worth less than the dollars they lent. And the shareholders, meaning you, get diluted exactly like a common stockholder in a company that keeps printing new shares to survive. Except the shares being diluted are the dollars in your IRA, your savings account, and your Social Security check.
There’s also a nasty feedback loop at work. Higher debt means higher interest costs. Higher interest costs mean bigger deficits. Bigger deficits mean more borrowing. Each turn of the wheel makes the next one worse, and the only pressure valve available is creating more money.
The dollar has been losing value for decades
According to the Federal Reserve Bank of Minneapolis, $100 in 2025 buys what about $12 bought in 1970. That’s the long-term cost of managing debt by diluting the currency.
The turning point came in 1971, when President Nixon closed the gold window and severed the dollar’s last tie to anything tangible. From that moment on, the supply of dollars has been limited only by the discipline of the people in charge. The Treasury’s 2025 report tells you how that discipline has worked out.
Here’s another way to see the damage. The stock market keeps hitting all-time highs in dollar terms, and that feels like prosperity. But measure the market in gold instead of dollars, and a different picture appears. The S&P 500 buys roughly two thirds fewer ounces of gold today than it did in 2000, even after decades of headline gains. The exact figure moves with daily prices, but the direction is unmistakable. Nominal gains have been quietly masking a deep erosion in real purchasing power.
Why government insolvency hits retirees the hardest
Everyone feels inflation, but it doesn’t hit everyone equally. A 40-year-old can offset rising prices with raises, promotions, and decades of compounding still ahead. A retiree can’t.
Once you stop earning, your savings become a fixed pool of dollars in a system that creates new dollars every year. Your money loses value at the same time that groceries, insurance, property taxes, and healthcare keep getting more expensive. That double squeeze is what serving the creditors looks like from the kitchen table of someone living on a nest egg.
This is why the insolvency story matters more at 65 than at 35. The question for a retiree isn’t whether the market goes up next year. It’s whether the dollars those gains are measured in will still buy the same retirement.
Why gold holds value when currencies don’t
Gold has occupied a strange place in the financial world for 5,000 years, and the Treasury’s report helps explain why it keeps coming back.
Gold is finite. It can’t be printed, diluted, or defaulted on. It sits outside the credit system entirely, which means its value doesn’t depend on any government’s promise to pay, any central bank’s next decision, or any balance sheet, including the one Washington just published. When you hold physical gold, you hold wealth that answers to no creditor and no politician.
The market has noticed. Gold has climbed more than 45% over the past 12 months, according to Yahoo Finance’s coverage of the Treasury report. JPMorgan has projected gold reaching $5,000 an ounce by the fourth quarter, and CEO Jamie Dimon has said gold could “easily” rise to $10,000 an ounce in this environment. Dalio’s view is simpler: most people hold far too little gold, and when bad times come, it’s a very effective diversifier.
The logic is worth understanding on its own terms. The same forces that weaken the dollar, rising debt, money creation, and fiscal promises that can’t be kept, are the forces that have historically pushed gold higher. That’s what makes it a hedge rather than a bet. It’s also why many people choose to hold a portion of their retirement savings in physical gold, including inside tax-advantaged accounts, so that part of their wealth lives outside the system that’s diluting the rest.
Is anyone in Washington doing anything about it?
To their credit, Hanke and Walker don’t just diagnose the problem. They point to two bills already sitting in Congress.
The first is H.R. 3289, the Fiscal Commission Act, a bipartisan proposal that would force a public reckoning with the government’s finances. The second, H.Con.Res. 15, calls for a convention to propose a fiscal responsibility amendment, modeled on Switzerland’s “debt brake,” which legally caps how fast government spending can grow.
Neither has passed. And it’s worth remembering that this debt was built over decades by both parties, through wars, bailouts, entitlements, and tax fights. Waiting for Washington to unwind $136 trillion in promises has never been a retirement strategy.
The bottom line
The question “is the US government insolvent” used to belong to the fringes of financial debate. Now it’s answered by the Treasury’s own report: $6 trillion in assets, $136 trillion in obligations, and a gap that grows by trillions every year.
In the corporate world, insolvency triggers a quiet but ruthless reordering. Creditors come first, shareholders come last, and the value that remains gets stretched to cover the promises. America’s version won’t arrive as a headline-grabbing collapse. It will arrive the way it already has for five decades: through a dollar that steadily buys less, and through savers who wonder why their careful planning keeps falling behind.
Understanding that shift is the first step. Deciding how much of your wealth should live inside the system that created it, and how much should live outside it, is the next one.
