James R. Karberg, CFP®, Principal and Practice Leader of REDW Wealth, joined 12 News to help viewers make sense of two major Treasury developments announced the same day in August: a surprise decision to double government debt repurchases on long-term debt, and the U.S. national debt crossing $40 trillion for the first time in history.
James explained that Treasury had already released its buyback guidelines for the upcoming session, but the August 19 announcement doubled the amount originally planned. In his view, the move signals concern about conditions at the 30-year Treasury mark that Treasury is looking to address early. As James put it on air, the increased buybacks are designed to “help give relief to the actual interest rate itself but also provide some liquidity in that portion of the market.”
What it means for everyday investors
For viewers with a 401(k) or other retirement account, James noted the impact depends on bond allocation. Bond prices and yields move inversely (when prices rise, yields fall) so investors already holding bonds may have seen values drift lower over the summer as long-end rates climbed to multi-year highs. Investors adding bonds to a portfolio now, by contrast, are stepping in at higher rates than in recent years.
Asked whether the traditional 60% stocks / 40% bonds retirement guideline still holds, James was direct: “It’s individualized, depending upon one’s risk tolerance as well as what they’re looking for — time horizon, and their needs and goals.” Stocks tend to carry more volatility, he noted, while bonds tend to be steadier — and the right mix comes down to matching that combination to an individual’s goals and expenditures.
The $40 trillion milestone
In the segment, James also addressed the same-day news that U.S. government debt topped $40 trillion for the first time. He pointed viewers to a household-balance-sheet analogy: as debt grows, more of it carries interest, and as rates rise, that interest becomes a larger claim on the budget — leaving less for everything else. He noted the federal government is currently borrowing roughly 30 cents of every dollar it spends.
For younger viewers wondering whether a 401(k) still makes sense in this environment, Karberg’s answer was unequivocal: yes — particularly when an employer match is available. “That’s the way to go to save out of mind — it comes off your check, you don’t have to think about it. Before you know it, you look back at six figures.”
About REDW Wealth LLC
Founded in 1997, REDW Wealth LLC is an SEC-registered investment advisory firm subsidiary of REDW LLC. With offices in Albuquerque and Phoenix, the REDW Wealth team provides financial planning, investment management and consulting, and estate planning services to individuals, families, businesses, institutions, and Tribal entities and manages more than $869 million in assets under management. For more about REDW Wealth, visit REDW Wealth online at redw.com/wealth, or connect on LinkedIn at linkedin.com/company/redw-wealth-llc.
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