Pod Insights The Clark Howard Podcast 03.11.26 Retirees Returning to Work / Medical Privacy Warning About this episode Today - The growing "unretirement" trend reveals that nearly half of retirees who return to the workforce do so out of financial necessity rather than choice. Clark shares several considerations and strategies for retirement planning. Later - you may have seen ads for online memberships for medical tests that will give you insights into your health. But will your information be protected? How important is medical privacy to your financial life? Because federal and state laws are often silent on these specific privacy standards, Clark suggests a unique, cautious approach. Unretirement: Segment 1 Ask Clark: Segment 2 Medical Privacy: Segment 3 Ask Clark: Segment 4 Mentioned on the show: Retirement on Pause: High Costs Push Older Americans Back to Work Age Americans Actually Retire (It’s Earlier Than They Plan) How To Find and Choose a Financial Advisor ETFs vs Mutual Funds: What’s the Difference and When Does It Matter? Fidelity Investments Review: Pros & Cons Popular online lab tests may not be covered by HIPAA protections Subscription Services: Why Canceling Is So Hard (and a Solution) How To Get a Gym Membership for Practically Free - Clark Howard Why You Do Not Want To Get a Big Tax Refund Check - Clark Howard Best 529 College Savings Plans By State When You Should (and Shouldn’t) Use a 529 Plan Clark.com resources: Episode transcripts Community. Clark.com / Ask Clark Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices
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1:02 Speaker 01 I'm so glad you're with us here on The Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. Today, I'm going to begin with something about planning for retirement. If you're somebody who wants to retire early, if that's your goal, what do you got to worry about? What do you have to think about? Got some things I want you to consider. And later, you've probably seen ads online and other places for memberships, online
1:41 Speaker 01 memberships, where you can have medical tests done that give you insights to your health. But the key thing that I was totally flippant about was, who has access to that data?
1:58 Speaker 01 Well, now I got to tell you, that was something I should not have ignored. So let's talk about stuff you can't ignore with retirement. All right, so listen to this that I saw in a Kiplinger article. Fifty percent of people who go back to work after they retired, had to go back to work because they retired thinking they had enough money for retirement, but they didn't. So I want you to think about what a bummer this is. You think, hey, I'm good. I'm done with working. I'm out of here. And you're having a great time not having to deal with an alarm clock, not working.
2:43 Speaker 01 And then something happens that you realize, oops, I don't have enough money for this decision I made. And the problem here is the momentum you give up in a career. When you quit, a lot of careers, once you put that fire break in place, you're gone. You can't easily get back to what you were doing, earning what you were earning. So this is something, I don't want to scare anybody, but we've addressed in the past, the problem with the gap, at whatever point you retire after age 50, to when you become eligible for Medicare at 65,
3:29 Speaker 01 that one big unknown is availability and how much it's going to cost you for healthcare coverage for that period of time when you're on your own and you've got to cover your health insurance. So we got these twin issues that often...
3:50 Speaker 01 We kid ourselves on, but they need to be really thought through. And I think it's a great time in your life when you're thinking about this, that you hire a fiduciary fee-only financial planner. You can hire somebody who you just pay for advice on an hourly rate, or someone who goes through with you what you're doing, how well you're set up or not set up to retire. And there's another factor, too. A lot of times, people after age 50, because even though age discrimination is supposedly illegal in the United States, the laws are not enforced at all. And so, a lot of people are forced out,
4:35 Speaker 01 particularly corporate jobs, when they would really like to continue working, but they get pushed out. And an ageist thing, they're thrown out. And so, then you're like, what am I gonna do? And that's hard, because you may not be able to, as you hunt around for another opportunity because of your age, you may have a hard time finding another equivalent opportunity. And so, you decide, ah, well, I'm just gonna go ahead and retire. This is a hard one, because you may find that you're better off, I hate to say it, taking a job that you feel like
5:18 Speaker 01 put you backwards from where you were in your career, but continues a steady paycheck, and hopefully includes health benefits as well, to get you to the point where your original intended time to retire was, where you'll be okay financially. And then, there's a whole nother thing. And so, that's why this is not all one thing. Even though my wife says, I'm the most absolute person in the world. It's either this or that. This is not this or that. There are a lot of people who are actually okay to retire, or to bag work, and feel like they're nervous that they don't have enough, and they work longer than they need to.
6:03 Speaker 01 And it's hard for them to let go, because of the fear of the future. And again, if you feel like you have to keep working... But other people are like, what are you still working for? You've got enough? That's another case where you hire a fiduciary fee-only financial planner to give you a sense, are you okay or are you not? Krista?
6:29 Speaker 02 Okay, Eric in Massachusetts says, you talked about possible tax implications when investing in mutual funds versus ETFs, specifically in regards to taxable investment accounts. During the podcast, I looked up whether the Fidelity Zero Funds, which I'm invested in, in a taxable account, are mutual funds and discovered they are. I know you've previously recommended investing in these funds, even in taxable investment accounts. So I was just hoping you could address whether you've changed your opinion regarding the Fidelity Zero Funds. Would you recommend that I stop investing in them and switch to similar ETFs offered by Fidelity? I enjoy the Fidelity Credit Card giving me 2% cash back and invest the rewards into my brokerage taxable account.
7:09 Speaker 01 All right, I'm going to deal with the last thing first. Congratulations to Fidelity that they, years ago, came up with this simple 2% cash back product and have stuck with it over the years. Seems like so many others come out with these cards, decide later, you know, a marketing team will change, or the finance people are like, why are we giving people this great deal? And they yank it away and say, our terms and conditions have changed. When you get that notice that terms and conditions have changed, have you ever seen it mean something was getting better? Probably not, right? The answer to your question, though, is the Fidelity Zero Funds are a type of mutual
7:54 Speaker 01 fund, but they are an index fund. Index funds have far more favorable treatment as a general rule, particularly broad-based index funds, like the Fidelity Zero Funds, that they are not going to generate
8:09 Speaker 01 A meaningful amount of current tax each year, which you would have with a more traditional professionally managed mutual fund. So you're just fine in the fidelity zero funds in an investment account.
8:25 Speaker 02 Mark in Illinois says, my brother and I co-own my late mother's house in Colorado. We could sell it for around $300,000 and he currently lives there as we clean it out, but he thinks this might be the only housing he can afford at this time. Unfortunately, he doesn't have two nickels to rub together. So if he can qualify for a home loan, how does this need to work to? A. Pay off the lender roughly $100,000. B. Pay me my share roughly $100,000. How do we handle his $100,000 in equity since I'm ready to sell and want my name off the house? We can't sell it for $200,000. So does he just try for a $300,000 loan to buy the house? Then turn around and pay his 100K back to the lender right away, hoping for a recast?
9:09 Speaker 02 Or is the only option to sell outright, which we each take our proceeds after paying closing costs on the lender? And then he moves to the rent game with some cash in his pocket?
9:19 Speaker 01 This is an impossible situation to work out fair and square for both of you. This is really, really hard. Okay, so one question I've got for you, Mark. When your late mom passed away, I'm sorry about the loss of your mom. The mortgage existing on that house has what's known in it as a due on sale clause, which also triggers in the event of the mortgage holder's death. And so if both of you are just paying on the mortgage that your mom already had, the lender obviously doesn't know that your mom has passed away.
10:01 Speaker 01 And in most loan contracts, most, that loan is called and it has to be paid off expeditiously. So the property, as a general rule, needs to be sold. Now, you may have a different circumstance where you've already refi'd, but it doesn't sound like that. So this situation.
10:28 Speaker 01 As much as your brother wants to live in the house, the only smart way to handle this unless your daddy warbucks and you've got tons of money yourself and you want to help your brother out, in which case is you would hold a loan on the home that you'd make to your brother and he would become the owner of the house. But that doesn't sound at all like where your head's at. You're not running a concession to benefit your brother. The house should just be sold. And I know that may sound cold, but that's exactly what I would do. And then your brother's going to have a hundred grand to go look for a place
11:12 Speaker 01 that he can buy with a very substantial down payment.
11:16 Speaker 02 Or he could rent and just put that in a high yield savings or invest or whatever.
11:19 Speaker 01 So I'm reading between the lines.
11:21 Speaker 02 Maybe he's not so great with money.
11:23 Speaker 01 Right. If he doesn't have two nickels to rub together. In his brother's case, the four savings of taking that hundred grand and putting his down payment on a house would be a wonderful way of having four savings in the brother's life.
11:37 Speaker 02 Okay, Chris in Ohio sent this one in. Clark, I'm in my mid 30s and my annual bonus will be getting paid out in the next few weeks. With my bonus money, I have enough to either pay my house off $50,000 at 6.125% or a newly purchased vehicle, $45,000 at 4.125%. Originally, I was planning on paying off the car with the bonus money. However, with getting a better interest rate with the vehicle, I'm leaning towards paying off the house now and shipping away at the auto loan over the next two years. Let me know your thoughts if I'm missing any risks with paying the house off prior to the auto loan.
12:10 Speaker 01 Chris, first of all, I love who you work for that you get a bonus big enough that you're going to pay off the balance on your mortgage.
12:17 Speaker 02 Yeah, and that he's in his 30s and has such a low balance and all those things.
12:21 Speaker 01 Exactly, that you owe so little on your house. I mean, this is great. Yes. Six and a quarter percent, six and eight interest rate on, I think it was six and eight, you said, on the loan. Pay off the mortgage, be mortgage debt free. Car loans extinguished so quickly, relatively speaking, 4% rate.
12:42 Speaker 01 That's a low priority, even though technically the mortgage interest is deductible, the auto loan in some cases is, usually not. Blow out the mortgage, own your home free and clear, and then pay off the loan as you agreed. Now, the big thing you didn't say is how you're saving for retirement. And you know my obsession with people as young as they can to really devote energy and a percent of your paycheck to saving an employer-provided Roth 401K or your own
13:20 Speaker 01 Roth IRA is a really, really ultra-high priority for you after you pay off the mortgage before you would blow out the 4% rate on your vehicle loan, which is a very favorable rate. Coming up ahead, just heads up on all these independent medical tests not being provided by a medical facility or a doctor. We got to talk.
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16:00 Speaker 01 You could have knocked me over with a feather when the bankruptcy happened for 23andMe. And it became clear as could be at that moment, how valuable that information was going to be to people who wish harm to you, like insurance companies. That the data that 23andMe had was like handing to the insurance industry on a silver platter, how to rate you or deny you for various insurance products. There are others out there that could use the information from that database for nefarious purposes.
16:40 Speaker 01 Well, that brought up something that I've been reading about, that it goes way beyond 23andMe. By the way, the data did not end up at risk. But 23andMe, before the bankruptcy was finished, gave any of us the ability to wipe our records clean, which I did. So, I've talked so much about all my... Genetics on the podcast YouTube show that I'm an open book. It's amazing. I'm still standing here right now. All the things that I found out genetically about myself. But anyway, all these places you can go to for lab tests, you know, have any test, anything like that.
17:25 Speaker 01 There's a lot of question because federal law is quiet on what can happen with that data. That HIPAA, which is something that, you know, we all go to a doctor's office and we're signing the generic HIPAA forms, but the HIPAA privacy standards do not apply outside of a direct medical environment under federal law. And I'm not aware of any states that have put in place protections that would be better than the lack of protections existing under federal law.
18:05 Speaker 01 So you stand the risk that you go and have tests done at one of these independent testing places and the information could end up out there. So I'm going to make a suggestion and there are going to be people who aren't going to like it. But if you go to an independent lab to have a test done, there's just something you want to know about and you're paying cash usually at these places. You're not involving insurance. You use a fake name. Okay, there I said it. They're not going to have your social security number and you're whoever you want to be. Be Abe Lincoln. I don't care who you are.
18:49 Speaker 01 You go and you, you give them a made up name so that there's no trail that leads back to you.
18:58 Speaker 01 I can't wait for the responses to that.
19:00 Speaker 02 Great. Okay.
19:01 Speaker 01 Sorry.
19:02 Speaker 02 Are you ready for some questions?
19:03 Speaker 01 Yeah, Clark.com/ClarkStinks. Say that three times. Is where you're gonna post things I've not thought about that I should have said is part of that.
19:14 Speaker 02 Okay, Steven in Ohio sent this one in. We have a, and here's the gym name, gym membership
19:20 Speaker 01 No.
19:21 Speaker 02 in our household. We did not realize that they said we can't cancel for three years. Is there any way to cancel early? I thought of just canceling my credit card.
19:31 Speaker 01 That won't help you. Okay, this is one of those things that happens, Steven. It's shame on them. It would only be shame on you if you ever did something like this again. Contract gyms, I despise. I despise them to my core. Because they are all about ripping you off with commission salespeople who get you to sign, get you all excited about the facilities and all that. And all they're after is your signature on a contract that obligates you. Many states limit the contract to three years. I guess that's the limit. You're from Ohio. I guess that's the limit in Ohio.
20:15 Speaker 01 These places disgust me. Because they're not interested in your physical health. They're only interested in your physical self. Your wallet, your credit card, your direct debit from a checking account. They are cheating you. Because the whole business model, the contract clubs, all the commissions involved. And then they usually sell off your contract to bank subsidiaries who you now are obligated to. And you're stuck with that thing. And what they count on is that you may start going there to work out.
20:57 Speaker 01 And as most people do, join a gym, sadly, within six weeks, people stop working out. But your wallet continues to get worked out for three years. And wait, it gets worse. Many of these contracts have rollover provisions, which means if you don't follow the exact requirements in that contract, which may involve certified mail or something like that.
21:22 Speaker 02 Canceling 90 days early.
21:24 Speaker 01 At a certain date, 90 days early, but no longer than 100 days early, you're then rolled over for another three years. You know what other industry does that? The home security companies. You know, you can't tell with home security companies if they're the crooks or they're protecting you from the crooks with the contracts. So Stephen, they got you. You can't just discontinue the credit card. You've got to pay it and look at it as an educational cost that you're never going to let somebody trick you, con you, rip you off in one of these type of contracts ever again the rest of your life, period.
22:09 Speaker 02 And in Florida says second generation Clarky here and torturing the third generation in the car every day.
22:14 Speaker 01 Child abuse.
22:16 Speaker 02 Recently you spoke about updating your withholdings if you receive a tax refund. My question is, how do you know what to change your withholding to? For example, every year my husband and I get around $3,000 back. What would I want to change in my withholdings to to make sure I don't end up paying the next year? Thanks for all you do.
22:34 Speaker 01 All right, so the most conservative answer is you reduce one or the other of your withholdings by about 1,500 a year, that you just pull half the money off the table. And then a year from now, if it turns out you did that and your refund's still even bigger than it was before, bigger than 3,000, then in 27, you reduce your withholdings some more. But the way you protect yourself is you don't change your withholding if you don't want to end up having to pay money next year on 26 earnings. Is you don't pull all the money back from withholding. Stick somewhere around 50%.
23:14 Speaker 02 Rachel in Oklahoma says, based on your advice, we've been contributing to Oklahoma 529 plans for our twin daughters who are turning 13 in April. We have just over $26,000 in each of their accounts with five years to go before college.
23:27 Speaker 01 Wonderful.
23:28 Speaker 02 With the $35,000 lifetime limit conversion to Roth IRA option, it has me wondering if we should keep investing in the 529 plans beyond the $35,000 each, or if we should invest money for them elsewhere after the $35,000. As also note, yes, we have healthy retirement savings for ourselves, since you say there are no student loan options for retirement. Thank you so much for helping us save more, spend less, and avoid getting ripped off.
23:54 Speaker 01 All right, Rachel, your kids are 13 in just weeks. You already can kind of tell what they're like. And if even one of the two of the twins seems pretty much certain to go to college, don't worry so much about the $35,000 limit, because the whole purpose of this money is to use for college costs. If, in your case, the purpose of the money is to take advantage of the privilege where you're able tax-free to convert this to Roth money for each of them, and then have it
24:33 Speaker 01 grow tax-free for the rest of their working years, it's the most wonderful thing you can do for your kids for long-term financial security. But if college is part of the deal, and it's clear to you that they're both likely headed to college, then don't change anything. Keep contributing to the 529. On the other hand, if you're getting a vibe that neither of them is going to go to college, if that's not likely, you've got 26 grand in each, you could actually stop contributing now, because by the time they're adults... That will 26,000 will have likely grown to 35 anyway.
25:17 Speaker 01 And you wouldn't want to contribute more now. It's a bit of a guess, but about where you are now with them about to turn 13 would likely, by the time you'd start converting it to Roth for them, would be at a point that it would be around the 35,000 anyway. So then what would you do? I'd want you to increase what you're putting in retirement accounts for yourself. And if you don't have a Roth IRA, maybe the money you were putting in the 529s starts going into your own Roths, just an idea. But these are good problems to have that you're bringing to me about the 529 accounts.
26:00 Speaker 01 In many states, you get an upfront tax benefit on state income tax, if your state has a state income tax, which Oklahoma has a big one. And then you get tax-free growth of the money, tax-free spending for college, tax-free continued growth and conversion into a Roth IRA up to the current limits. I mean, it's a win all the way around. And I want to thank you so much for joining us today. I hope that you learned something today that helps your wallet win every day. And no coming up on Friday, it's time for another edition of Clark Stinks.
26:43 Speaker 01 So have a great next couple of days. And if you want more solid advice every single day, sign up for our free newsletters at clark.com/newsletters. And we have a variety of choices for you there. They are free and I hope they are powerful in your life because our team works so hard to give you content that builds knowledge and at the same time, it's knowledge you can act on. See you Friday.
27:23 Speaker 00 Life is all about making decisions. Sometimes you make questionable ones. Like buying a new TV that's too big for the wall because the electronics store employee was a little too good at their job. Then, sometimes you make great ones. Like protecting your home and auto with Progressive. You get customized coverage options, so you can be sure you have the right coverage. Get your quote today at progressive.com. Progressive Casualty Insurance Company affiliates and other insurers. Not available in all states.
27:52 Speaker 03 LinkedIn is pretty amazing at helping you grow your small business. We cannot stop your new clients from emailing you at 3 a.m. We can help you sell, market, and hire in one place. We cannot help you be in three places at once. And while we can't help you organize your calendar, LinkedIn can help you land more clients so you have a calendar to organize. Grow your small business on LinkedIn. Learn more at linkedin.com/smallbusiness.
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