09.04.26 Clark Answers His Critics on Clark Stinks / Clark & Wes Talk Retirement

The Clark Howard Podcast

In this episode of The Clark Howard Show, Clark tackles criticism through the 'Clark Stinks' segment, addressing listener feedback on topics

Key takeaways

• Retiring early brings a statistically significant 21% increase in happiness due to the psychological relief of no longer being forced to work.
• Many people mistakenly believe they must sell rental properties during their lifetime; however, passing them on at death provides heirs with a stepped-up tax basis, avoiding capital gains taxes.

Main topics

• Clark Stinks: Listener feedback on real estate tax appraisals and capital gains advice
• Property tax systems and millage rates across states

Notable quotes

"It's not that you're not working, it's that you don't have to work."

Conclusion

Clark Howard and Wes Moss emphasize that true retirement happiness comes not from wealth

Transcript preview

Speaker 1 (0:04) It's my pleasure to welcome you here to the Clark Howard Show. Our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life. And today, Krista, we're starting off with my favorite activity of the week. You do love it. Clark stinks when we get to talk about how I messed up. It's how I learned. And then later... We're going to talk about, you know, we do our Ask an Advisor podcast as well. And Wes Moss, who does that, has done extensive research on what are the key things you need to do to be able to retire at an earlier age. And I have a special warning about unexpected retirement as well that I want to bring up and get Wes's opinion on. That's going to be the second half. Speaker 1 (1:03) of today's podcast and YouTube show, a rare occasion where Wes and I share the microphone together. Well, you know, Wes is going to have to really raise this microphone up because he's a foot taller than I am. He's so tall. Yeah, I look like a shrimp. And you're not a shrimp. Well, anyway, it's time, though, to hear how I messed up in today's... Clark Stinks. I should have never encouraged you to speak. You must think I'm pretty stupid. You should be ashamed of yourself. Well, maybe I'm wrong. Maybe I'm wrong. Maybe you're right, pal. Speaker 1 (1:42) Somebody complained that I started speaking too soon and they didn't get to hear the whole Clark Stinks song last time. So I thought I'd just chill on that a little bit. Okay. All right. But see, I think the people who watch our YouTube show love seeing the Krista dance. That's not dancing. I'm just swaying. That's not dancing. No, that's not real dancing. For me, that would be way into dancing since I can't dance at all. All right. Josh in Pennsylvania says, I cannot believe Clark got through an entire segment about real estate tax appraisals without mentioning millage rates. My appraisal went up 90% from eight years ago, but that's not accurate. And it doesn't mean my taxes will go up. It only matters in relation to other values. According to Pennsylvania law, the millage rates. Speaker 1 (2:26) must be reset so no additional tax is collected based on values. Then the rate can be increased as normal. The reassessment is meant to get everyone on the same playing field. If you could sell your house for your appraised value, don't appeal. Right. Thank you very much. And as I tried to say when we did that segment about appeals, is that every state does this differently. Every state has its own wrinkles. And states that use a digest where the millage rate is adjusted so that it doesn't allow government to just get a lot more tax money by saying, oh yeah, your place is worth more. That is a great system. I would say that is a better system than what California kicked off back in, I think, 1979 with Prop 13. Speaker 1 (3:20) where people have ended up with house lock because their property tax essentially never goes up any meaningful amount from when they buy the home and even living in it decades later. And it's made it hard for younger people in California to ever be able to buy a house. One of the reasons. Bunny in California says Clark is a hero to the frugal, but his answer to a listener who asked how one can avoid capital gains when you sell rental property could have smelled better. Clark could have mentioned that for those fortunate enough to be building wealth for heirs instead of themselves, one can avoid capital gains for your family by holding the property till the owner's death. Once children would get a full step up in basis upon death of the owner and pay no capital gains taxes in community property states like California and Texas. Speaker 1 (4:07) your spouse would also get a full step up if the property was jointly owned. With how much property values have increased in a state like California that also has a high state taxes on capital gains, it could be a very wise move to let your heirs inherit your property. Thank you. And thank you for pointing this out because I keep dealing with circumstances where an aging parent thinks they're doing a favor to their kids by signing the house over to them while they're living. And they're creating a capital gains tax problem that would not exist if they waited till the time of their passing for a child to inherit at that point rather than receive it while the aging parent is still alive. Okay. Rick in Connecticut, but hates high taxes. I hate the high taxes in Connecticut. Wrote him with this. Thanks to Clark. Speaker 1 (5:00) It's saying Vanguard has an option in their app to combat ACATS fraud on your brokerage accounts. However, Clark did not address 401k accounts. Although not mentioned in the original post, Vanguard and Fidelity's transfer locks do not protect 401k accounts. Please, oh mighty Clark, explain why. Are 401k accounts also susceptible to ACATS fraud or are they not susceptible? 401k accounts are subject to fraudulent transfers out. where someone uses false identity, moves the money out, and you have a terrible problem at that point. I dealt with this, for those of you who aren't aware, I do TV five days a week on a number of stations around the country on their news. And I did a story on someone whose retirement money was swiped, and they didn't realize soon enough, and they lost the ability to recapture their money. Speaker 1 (5:59) Because this is an area where there's a lot of money sitting, it's very appealing to crooks. And this is why it's really important that when you're many 401k plans, you're only getting a quarterly statement. Particularly if you no longer work at a place and you have a stranded 401k there, you want to get those quarterly statements. You want to open them and you want to in a timely fashion if something's not right. to react to it. I would also say set up notifications. Most of these companies and websites will allow you to set up notifications if there's any sale or anything like that, because usually you have a couple of days to catch that because most money is invested in something that you'd have to sell. Speaker 1 (6:42) Mark in Washington says, Clark, you don't stink. In fact, I agree with Yogi Berra. Predictions are hard, especially about the future. However, I have to disagree with your recent take on the stock market. I work as an IT developer and AI has already doubled or tripled my productivity. Across the economy, I see plenty of jobs adapting to that massive leap in output and driving even more growth. I see major growth coming. Thank you. And AI is a disruptor. that is significant enough that we don't yet know all the tentacles it'll have, all the good things and bad things that will occur. Human nature being what it is, polling shows that most people only look at AI from a negative perspective. The possibility of economic growth may be there. But I just read a long essay about this, I think in Barron's Magazine, about how there's unintended reverse effects. Speaker 1 (7:39) from AI as well. That some industries will benefit mightily from the tools of AI and the implementation of AI in what they do. Other industries will suffer as a result. So it's too early to know what the long-term implications and impacts are going to be. Mike in California says, I never thought I would find myself writing a Clark stinks, but the Clark Meister finally talked about a subject I'm very familiar with and made some troubling remarks about HOAs and HOA fees. In his monologue, Clark loosely equates HOA dues to taxes. It's inaccurate to label them as taxes since taxes go to pay for public services and HOA dues are used to pay for the needs of a private community. Homeowners are required to pay annual. Speaker 1 (8:27) homeowner dues, often monthly, to pay for their share of the common area expenses, which include maintenance, repair, and replacement costs of necessary components that make up the common areas. Depending on the HOA, this could include water, garbage, roads, landscaping, painting roofs, etc. Clark mentions foreclosure and fines in the same breath. I know that Clark must paint in broad strokes when he talks about topics, but I can tell you that in California, a foreclosure as a result of an unpaid fine is very, very rare. Speaker 1 (8:56) In most cases, if an HOA homeowner chooses not to pay a fine, he or she would be deemed by the vote of directors as a member not in good standing, in most cases meaning they would lose their privilege to access any amenities that are available to homeowners. The balance would remain on their account indefinitely or until time they sell their unit, at which point they would be required to settle their debt along with any penalties, most likely. Speaker 1 (9:19) late fees. As a longtime director of my own HOA, I applaud Clark for becoming a board member when he lived in one, and he succinctly expresses his reason for doing so as a means of protecting his interests. I truly appreciate the passion, dedication, and hard work of all the