To Lev Steinberg, it seemed like a good place to park his nest egg.

Puerto Rico bonds offered high returns and tax-free income. And there was little chance, his broker assured him, that the government would default on its debt.

So Mr. Steinberg went all in, investing more than 85 percent of his retirement savings in funds with large concentrations of Puerto Rico bonds.

“They told me this was safe,” said Mr. Steinberg, a 64-year-old mathematics professor at the University of Puerto Rico, “that the legal protections to repay the bonds were strong.”

As it turns out, the bonds were far from safe.

Puerto Rico officials now say the government cannot afford to pay its $72 billion in debt. And last week, the government defaulted on a bond payment for the first time since the island came under the jurisdiction of the United States nearly 117 years ago.