You might think that Puerto Rico’s default on its debt doesn’t have anything to do with you personally, or with your finances. It probably doesn’t, but if you have invested retirement (or non-retirement, for that matter) savings in a tax-exempt municipal bond mutual fund, you might want to see if that fund holds any bonds issued by agencies of Puerto Rico. Those bonds have taxation characteristics similar to those of bonds issued by state and local governments in the United States, which has in the past made them attractive as holdings in tax-exempt municipal bond funds.
I wouldn’t venture to predict whether those bonds will end up being worthless, but I think it’s a pretty safe bet that they will lose a significant amount of their value.
I found this take on the background on why Puerto Rico is bankrupt to be very interesting. It had occurred to me that Puerto Rico could have an economy based on agricultural exports, but they apparently gave up on that a long time ago.
The contents of this blog, this web site, and any writings by me that are linked here, are all my personal commentary. None of it is intended to be legal advice for your situation.