01.24.25 Clark Answers His Critics on Clark Stinks / Job Change and Your 401(k)

Summary

The Clark Howard Podcast: Episode Summary – January 24, 2025

Episode Title: Clark Answers His Critics on Clark Stinks / Job Change and Your 401(k)

Host: Clark Howard

Release Date: January 24, 2025

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Clark Howard's January 24, 2025 episode delves into two primary topics: responding to listener criticisms in the "Clark Stinks" segment and providing essential advice on managing your 401(k) when changing jobs. The episode is structured to engage listeners by addressing their concerns directly and offering actionable financial insights.

Introduction and Episode Overview

Clark Howard begins the episode by sharing updates about the show's schedule and improvements based on listener feedback. He announces a shift from producing five podcasts a week to three, aiming to deliver more quality content. Additionally, he introduces a bi-weekly "Clark Stinks" segment where listeners can provide feedback or critique his advice.

Notable Quote:

"The days are getting longer again... there are times that you need to cast a shadow on me." – Clark Howard [01:09]

Clark Stinks: Addressing Listener Criticisms

In the "Clark Stinks" segment, Clark addresses several listener comments, providing clarifications and his perspectives on various financial topics.

1. Roth vs. Traditional 401(k) Accounts

A listener named Lane challenges Clark's assertion that a maxed-out Roth 401(k) is superior to a traditional 401(k) by emphasizing the benefits of additional investments in a brokerage account.

Listener's Point:

"It's true that the Roth is better than the traditional plus a brokerage account, but not by anywhere near the 20% you are stating." – Lane [03:52]

Clark's Response: Clark explains that the primary advantage of a Roth 401(k) lies in preventing "leakage" through disciplined saving directly from pre-tax income, reducing the temptation to divert funds elsewhere.

Notable Quote:

"It comes down to tax rates. Keep doing the great work you're doing, Lane." – Clark Howard [04:25]

2. 529 Plans vs. Personal Retirement Savings

Listener Richard criticizes Clark's emphasis on saving for children's college education over personal retirement funds, sharing his success in raising college graduates without incurring student debt.

Listener's Point:

"Maybe in addition you should say if you're not saving for your own retirement, do that first and then consider some for your children in a 529." – Richard [05:12]

Clark's Response: Clark agrees, stating that personal retirement savings should take precedence. He emphasizes that while scholarships and grants are available for education, there are limited options for retirement savings.

Notable Quote:

"Never save a dollar for your own kids' college if you're not saving first for your own retirement." – Clark Howard [06:00]

3. Brightline Railroads Critique

Jay, a listener with engineering experience, provides a nuanced perspective on Brightline railroads, challenging Clark's negative remarks by detailing the infrastructure improvements and increasing ridership.

Listener's Point:

"The current trip is expensive and Brightline is not profitable, but at least ridership has been increasing." – Jay [07:18]

Clark's Response: Clark acknowledges Jay's insights but maintains his critical stance, highlighting the financial inefficiencies despite the developments.

Notable Quote:

"I did not know what you're telling me that part of the line, in fact, the majority of it is far to east coast right away you stink like." – Clark Howard [07:50]

4. No Surprises Act Clarification

A healthcare lawyer corrects Clark's explanation of the No Surprises Act concerning air ambulance billing, clarifying that while it prohibits balance billing, patients may still incur significant out-of-pocket expenses.

Listener's Point:

"The No Surprises Act just prohibits balance billing... the patient responsibility even with NSA protection can still be $10,000 plus." – Healthcare Lawyer [09:32]

Clark's Response: Clark appreciates the clarification, acknowledging the complexity of the legislation and the ongoing challenges it presents to consumers.

Notable Quote:

"You are still exposed up to your deductible and your out of pocket." – Clark Howard [09:46]

5. Dumpster Diving as a Money-Saving Tip

R. Dallas critiques Clark's recommendation of dumpster diving as an extreme money-saving strategy, pointing out its impracticality and potential drawbacks.

Listener's Point:

"Your staff is recommending dumpster diving as a way to save money... you'll smell like a dumpster if you take your own advice." – R. Dallas [10:06]

Clark's Response: Clark shares his personal experience with dumpster diving but concedes that it's not a suitable strategy for everyone, labeling it an extreme method of saving.

Notable Quote:

"Dumpster diving is, as Dallas said, it's not for her. It's not for everybody." – Clark Howard [11:11]

6. Warehouse Club Membership Criticism

Listener Lynn challenges Clark on his preference for Costco over BJ's Wholesale, questioning the value and effectiveness of warehouse club memberships.

Listener's Point:

"Clark owes it to his listeners to join BJ's and make a sacrificial trip... make Clark's take on it." – Lynn [12:03]

Clark's Response: Clark recounts his past experiences with BJ's Wholesale, ultimately finding that the membership did not align with his needs compared to Costco.

Notable Quote:

"Different stores like there are people who say I don't know why you talk about Costco. Sam's is so much better. But actually, I think every one of these warehouse clubs has a market they serve and BJ's wholesale just wasn't doing it for me." – Clark Howard [12:30]

7. High-Octane Fuel Recommendations

Matt, a former mechanic, disputes Clark's advice on using premium fuel for certain vehicles to avoid voiding warranties, stressing the importance of adhering to manufacturer specifications.

Listener's Point:

"Please use the manufacturer specified fuel rating... you are now the second mechanic who has made that point to me." – Matt [14:43]

Clark's Response: Clark acknowledges Matt's expertise and reiterates the importance of following manufacturer guidelines regarding fuel octane ratings.

Notable Quote:

"I appreciate that because the point you made you are now the second mechanic who has made that point to me." – Clark Howard [14:43]

8. Estate Planning Without a Will or Trust

Phil questions Clark's advice on estate planning, sharing his experience with simple beneficiary designations without the need for wills or trusts, and seeking validation of his approach.

Listener's Point:

"Are my wife and I missing something here?... I have a net worth of $2.5 million." – Phil [15:33]

Clark's Response: Clark congratulates Phil but advises consideration of scenarios where simultaneous deaths occur, highlighting potential gaps in beneficiary designations and the benefits of having a simple will.

Notable Quote:

"If you don't have kids and you want it just to be as simple as possible, at the very least you're keeping everything out of probate." – Clark Howard [16:08]

Main Topic: Job Change and Your 401(k)

Transitioning from the "Clark Stinks" segment, Clark shifts focus to the critical topic of managing 401(k) accounts during job changes. He references recent Vanguard data revealing that when individuals switch jobs—despite receiving a salary increase—they tend to contribute a lower percentage to their new employer's 401(k) than they did in their previous positions, leading to reduced retirement savings.

Key Insights:

1. Salary Increases and Contribution Rates:

   • Vanguard Data: Average new jobs pay 10% more, but contribution rates to new 401(k)s drop.
   • Clark's Concern: This reduction undermines potential retirement growth despite higher salaries.

2. Behavioral Economics:

   • Clark emphasizes human behavioral tendencies to increase spending with higher incomes, potentially diminishing savings rates.

3. Actionable Advice:

   • Increase Contributions Proportionally: Upon receiving a raise or new job with higher pay, Clark advises increasing 401(k) contributions by the same percentage.
   • Placeholder Strategies: If there's a delay in enrolling in the new 401(k), he recommends opening a Roth IRA as an interim savings vehicle.

Notable Quote:

"When you get that new job, if you end up making 10% more than you were before, I want you contributing 10% more to your 401k." – Clark Howard [20:19]

4. Long-Term Financial Health:
   • By maintaining or increasing contribution rates, individuals can better secure their financial futures, compensating for the government's limited role in retirement funding.

Notable Quote:

"You are used to living on the level of income you were getting... you build money for your future." – Clark Howard [20:19]

Listener Questions and Responses

Towards the end of the episode, Clark addresses specific listener inquiries regarding BJ's Home Improvement Services and 529 plans.

1. BJ's Home Improvement Services vs. Local Contractors

Kathy from Florida seeks advice on whether to utilize BJ's Home Improvement Services for bathroom or kitchen renovations or to hire local contractors.

Listener's Question:

"Can we actually get a quality bathroom or kitchen out of them? Are we better off concentrating our efforts on local contractors?" – Kathy [24:22]

Clark's Response: Clark advises obtaining quotes from reputable local contractors, especially for major renovations, citing potential accountability issues with large home improvement retailers.

Notable Quote:

"I much prefer that you get quotes from local contractors that you have references from." – Clark Howard [24:42]

2. 529 Plans for Older Students and Personal Education Savings

Tara from Ohio inquires about the viability of opening a 529 plan for her high school-aged children and Mindy from Hawaii considers a 529 for her own law school tuition.

Listener's Questions:

"Is it worth opening one up for the 10th grader now?" – Tara [26:10]

"Should I consider opening a 529 plan for myself?" – Mindy [26:48]

Clark's Responses:

• For Tara: Clark endorses opening a 529 plan, highlighting tax benefits and growth potential tailored to the students' educational timelines.

  Notable Quote:

  "If you go into the age-based portfolio... the odds are overwhelming that you'll make decent money on it with minimal risk." – Clark Howard [27:16]

• For Mindy: Clark recommends a 529 plan for personal education expenses, emphasizing tax-free growth and potential future use in law school.

  Notable Quote:

  "For the same reason I said for the Ohio kids is to your advantage as an adult to have a 529 that you own is yourself as beneficiary." – Clark Howard [28:19]

Conclusion

Clark Howard wraps up the episode by reiterating the importance of proactive financial management, especially during life transitions like job changes. He encourages listeners to utilize available resources, such as his newsletters and ClarkDeals, to continue saving and making informed financial decisions.

Final Thoughts:

"When you get that promotion or a better-paying job, build money for your future. You're not going to miss it if you increase those contributions right when you get that promotion or right when you get that better paying job." – Clark Howard [20:19]

Listeners are reminded to stay engaged with Clark's resources for ongoing financial empowerment and support.

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This episode serves as both a platform for community feedback and a conduit for essential financial advice, embodying Clark Howard's mission to help listeners save more, spend less, and achieve financial freedom.

Transcript

[Ryan Reynolds]

Hey there, Ryan Reynolds here. It's a new year and you know what that means. No, not the diet resolutions. A way for us all to try and do a little bit better than we did last year. And my resolution, unlike big wireless, is to not be a raging and raise the price of wireless on you every chance I get. Give it a [e-mail] Switch $45 upfront payment required equivalent to $15 per month. New customers on first 3 month plan only. Taxes and fees. Extra Speed slower above 40 GB on unlimited. See mintmobile.com for details.

[Unknown]

Foreign.

[Clark Howard]

It'S great to have you here on the Clark Howard show. You know, our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life.

[Unknown]

Every time you point at me, every time you're saying, you got to watch.

[Clark Howard]

The YouTube show to see that because you start laughing. Happy Friday, by the way.

[Unknown]

Happy Friday.

[Clark Howard]

I hope that you've had a great week this week. And you know something that's so great? The days are getting longer again.

[Unknown]

I know we're coming out of the tunnel, chugging out.

[Clark Howard]

I'm pretty excited about that because the wobble ended around January 20th. And so every day now, the days are going to get longer again. Less darkness. But there are times that you need to cast a shadow on me. How's that? Nice for advice that I gave that you're gonna hear your response to your feedback to me in our weekly Clark Stink segment. And don't worry, this is not the end of Clark Stinks. But for now, we're gonna get more new content to you since, I mean, I really stink because I'm doing three podcasts a week instead of five. So we wanna have more new content. So every other week starting now is going to be a Friday Clark stinks.

[Unknown]

Correct.

[Clark Howard]

Right.

[Unknown]

Unless we get so many Clark Stinks about that that it becomes really right. Yeah, we, you know, we pivot when we need to. How are you liking your new schedule?

[Clark Howard]

I love it. I love it. It was a gift I gave myself.

[Unknown]

Yep.

[Clark Howard]

To work three days a week instead of five. And, well, I just like it.

[Unknown]

And I want to thank everyone for the comments on the Ask an Advisor shows we're doing on Tuesday with Wes. Mostly good comments, but the feedback we get too is really important. And we had some microphone issues. Sorry about that. We worked on that and we're going to keep working on it. So thank you very much to everybody who's watched or listened to those episodes.

[Clark Howard]

Okay, so those of you who watch the YouTube show. You see the mic that Krista uses, the mic that I use. She sounds so much better on the mic. You would anyway. But you sound so much better because you're using a much more sophisticated mic than I wear. I wear caster mic because, well, I can't keep still.

[Unknown]

Yeah, we had to. We had to relegate you to the. And we might have to do that to Wes. We're threatening it because he moves around so much. And you, when you're. You need to speak into the microphone. But you were incorrigible, so we just had to give you one.

[Clark Howard]

I am not trainable. So we had to. We. I kept saying you needed to put me on a sportscaster headset.

[Unknown]

I know. Well, we did it.

[Clark Howard]

Yeah. Sorry. So the other thing we're going to talk about today, after Clark Stinks, we're going to talk about a big mistake people make when switching jobs. But without further ado, it's time to get to Clark Stinks. I should have never encouraged you to speak. You almost think I'm pretty stupid. You should be ashamed of your. Well, maybe I'm wrong. Maybe I'm wrong. Maybe you're right, pal.

[Unknown]

Alright? I just really can't let this go. Your statement that a maxed out Roth is better than a maxed out traditional account is absolutely correct. But if you've got enough money to max out a Roth, then you have additional money after you max out the traditional account to put into a brokerage account. When you take that into account, it's true that the Roth is better than the traditional plus a brokerage account, but not by anywhere near the 20% you are stating. In fact, maybe not all that much better. It comes down to tax rates. Keep doing the great work you're doing, Lane.

[Clark Howard]

Lane. Thank you. All right, so let me tell you the 20%, okay? So when people have the money pulled out of their check before they do anything else, there's no leakage. The money is going into that Roth 401k. On the other hand, if they're in the traditional 401k, and then they say, well, you know, I'll take that money. I'm not having to pay in tax right now. I'm going to put that money into a brokerage account. That's where the leakage comes, is where we intend to do something, Lane, but we don't get around to it. So for me, it's all about human behavior, consumer behavior. That is the reason I love the Roth version. Except for an ultra, ultra, ultra high income earner.

[Unknown]

Okay, I cannot continue to let you slide any longer. No stinking, but you can do better with questions on 529 plans or college savings. So many people state they're not saving for their future and yet you rave about them saving for kids college. Maybe in addition you should say if you're not saving for your own retirement, do that first and then consider some for your children in a 529. As you say often one parent could take care of 10 kids, but 10 kids cannot take care of one parent. An important parenting message should be college is the responsibility of the child, not the parent. I have five children, four are college grads with no student debt and dad did not pay for school and one could have but decided to serve in the army. Teaching financial responsibility has given them a much better start than paying for college. Richard.

[Clark Howard]

Richard thank you. And it's funny because maybe I don't say the phrase anymore. I say never save a dollar for your own kids college if you're not saving first for your own retirement. You stated it more eloquently than I do and it is true because there are no scholarships for retirement.

[Unknown]

Say, I've heard you say that there.

[Clark Howard]

Are so many different ways of paying for college. Could be grants, work. There are ways to pay for school that don't exist for retirement.

[Unknown]

Some of your statements about Brightline railroads smell like a partially used carton of milk when returning from a long vacation. Not too bad, but not quite right either. Brightline is a tenant railroad on the Florida East Coast Railway from Cocoa south to Miami. They did build their own line from Cocoa west to Orlando and hope to extend to Tampa. So they do have to deal with freight traffic on about three quarters of the current operations in Florida. However, with the exception of one major bridge, Brightline did expand the Florida East Coast Line from one to two tracks to alleviate this congestion. I worked on this project as an engineer for one of their major equipment suppliers during construction, so I know the project well. The current trip is expensive and Brightline is not profitable, but at least ridership has been increasing. Jay.

[Clark Howard]

Jay, thank you. I just love that Brightline used so much private money rather than just government money. And I haven't heard anybody mention the Florida East Coast Railroad and forever they've got if you go to St. Augustine, you see a beautiful old Florida east coast locomotive and rail cars and I did not know what you're telling me that part of the line, in fact the majority of it is far to east coast right away you stink like.

[Unknown]

Penguins you would know how bad they smell if you would take that trip to Antarctica already. I just got back from a trip to Antarctica, crossing the Drake twice and as a bonus, hurricane force winds while in Antarctica with 30 foot waves. I typically get seasick thinking about getting on a boat, so I was ready. Patch pills, wristbands, et cetera. I did not get seasick, but even if I had, it was well worth it. Antarctica is unlike any other place. It was amazing. Don't cheat and fly the Drake. It is something awesome to experience. Just be prepared with everything you can do to combat seasickness and enjoy the ride. I've been listening to you for years and credit you for being able to afford wonderful trips like my most recent trip. You will never be as young as you are right now, so take the trip. Thank you for all you've done for me and countless others.

[Krista]

Beth.

[Clark Howard]

Beth, thank you. I mean, it's unanimous isn't it? Every single person talks about how I just need to stop being a wimp about this and go through the Drake Passage.

[Unknown]

I want to go, but I'm going to have to have some major pills. No Stank. Just a clarification. A few weeks back a caller called about the bill they received for being transported by air ambulance. Clark stated the bill is protected by the no Surprises act and to dispute it. I'm a health care lawyer and that statement isn't necessarily true. He was partially right. It is under the no Surprises act umbrella. But the bill still may be astronomical. The no Surprises act just prohibits balance billing. In this case the patient. The caller in this case can still be billed for their copay deductible and their coinsur the percentage that the patient has to pay up to the out of pocket maximum. Depending on your plan, the patient responsibility even with NSA protection can still be $10,000 plus.

[Clark Howard]

Wow.

[Unknown]

On my health plan for example, a tier three air ambulance has a $5,000 deductible and then the patient pays 20% of the rest. Remember that while the no Surprises act helps, it can still be expensive. Ryan.

[Clark Howard]

Ryan. Thank you. And the no Surprises act surprises us repeatedly about how complicated it is to use the prevent of it. And I really appreciate your expertise on this. So you are still exposed up to your deductible and your out of pocket. Out of pocket, right.

[Unknown]

I finally figured out why you stink. Your staff is recommending dumpster diving as a way to save money. Do you proofread these articles? I greatly appreciate your optimism and insight, but you'll smell like a dumpster if you take your own advice. And this is from Big Howie and I'm going to read you the article that R. Dallas wrote on unusual saved ways to save money. I'm not going to read you the whole article. This is the dumpster diving safely part. This is one of those extreme tips I mentioned earlier that will not be for everyone. Dumpster diving is something I've admittedly never tried, but people who practice freeganism swear by this unusual money saving tip.

[Clark Howard]

Freeganism. That's a term I've not heard before.

[Unknown]

Stores and individuals throw out an insane amount of food. In fact, one survey found the United States discards nearly 60 million tons of food, nearly $218 billion worth per year. Dumpster diving, especially right after grocery stores throw out damaged or dull products that are still perfectly good in most cases, is one effort to combat this waste. If you do decide to try this tip, make sure you do it safely. Follow all local laws and ordinances to ensure that you aren't trespassing on private property.

[Clark Howard]

So long, long ago and far, far away I did dumpster dive because long ago there used to be a thing where you got a computer with special rebates but you needed the barcode off the box. The computer came in and my wife, keeping an ultra neat place, saw the box sitting there, had already taken the computer out. She broke the box down and threw it in the bin. This was before we could recycle those. Did I dig in the dumpster to get that barcode off the box? You know I did, of course, because it was worth $250 and I did. But dumpster diving is, as Dallas said, it's not for her. It's not for everybody. It's extreme form of saving money.

[Unknown]

Clark stinks worse than finding out you didn't apply a coupon. Clark owes it to his listeners to join BJ's and make a sacrificial trip. Unlike Costco, BJ's doesn't display their sales near the impacted items. You need to look through their onerous list of online coupons and click to redeem. Do you do that before you shop? After they really want you to get the sale price? I would love to get Clark's take on it, even if it means he has to finally join BJ's and forego a trip to his precious Costco.

[Clark Howard]

Lynn okay, so Lynn, I was challenged four years ago. Or was that five years ago?

[Unknown]

I don't know.

[Clark Howard]

Remember I was challenged to go back as I used to be. I was a BJ's Wholesale member for years and years and I found I wasn't using it so I let the membership lapse. So I signed up again for another year as a challenge from not one but two listeners and I went to BJ's. I know all about the coupon. So much what you have to do there is based on having a scannable coupon and I just found I didn't go back regularly and I did not renew my membership. So different stores like there are people who say I don't know why you talk about Costco. Sam's is so much better. But actually I think every one of these warehouse clubs has a market they serve and BJ's wholesale just wasn't doing it for me.

[Unknown]

I heard your advice from a recent episode that was talking about a caller's lexus that required 91 octane minimum fuel and that it may void the warranty if said customer uses anything lower than that. I can vouch as a former mechanic that car manufacturers will fight to not pay warranty claims regardless of make, with the well regarded Toyota being one of the worst recent offenders. Logs are kept within these vehicle ecus, the engineer's computer and notes will be made of this dealership. Mechanics are required to take very intricate notes and procedures that could lead up to any type of engine failure and they will exploit any kind of possible misuse they can. And the misuse was in quotes by the way. In addition to this, a majority of new vehicles are turbocharged and are high compression. This is going to necessitate high octane fuel, although manufacturers do make quote unquote limp modes with lower performance for low octane fuel conditions. These are meant to be there to make a new vehicle. Stupid proof. In today's day and age where new vehicle owners know much less about the mechanical aspects of taking care of a vehicle than ever, please use the manufacturer specified fuel rating. The EPA has made emissions targets and fuel ratings hard to achieve while also meeting consumer demands. If you were willing to spend the outrageous price of a new car, just use 91. Thanks Clark Matt Matt thank you.

[Clark Howard]

And the octane rating. There are different octane formulas, but your point is something that another mechanic pointed out recently and that is there are vehicles that say use premium just so they can meet their EPA mpg test levels, but there are many that will run just fine on regular and don't need the premium gas. You point out a reason why the premium gas should be necessary in order to not void the warranty and I appreciate that because the point you made you are now the second mechanic who has made that point to me.

[Unknown]

Clark, you stink like the Vikings when they're playing the Lions.

[Clark Howard]

Not all the time. The Vikings and Lions. It's fun to watch those two.

[Unknown]

You frequently discussed end of life logistics, but I've never heard you say you don't need to waste money by having a will or trust. In Minnesota, we have the ability to use the very simple form called Todd Transfer on death deeds. My collector car also has a TOD designated on the title. All of our beneficiaries are up to date. We have our health care directives and power of attorney completed. We consulted an estate attorney and our fiduciary. They both agreed that we don't need a will or trust granted. We have a very simple estate. Are my wife and I missing something here? Thanks to you, Krista and your entire team, we have a net worth of $2.5 million. Skull Phil.

[Clark Howard]

Wow. Congratulations Phil. Two and a half million. You got a lot to be proud of. So what happens to your money in the event that gosh is so morbid that you both pass away at the same time? Who's going to get what? What are your intentions? And yes, you can use various forms for beneficiary designation for all different kinds of accounts. Some of these rules will vary from state to state. And in a situation where you're just simply passing money from one spouse to the other, very simple. But what happens to your money with no will in the event that you do die within 30 days of each other as the designation in most states? So what then happens at that point? Depending on the form you're doing, there may be a place on there for a secondary beneficiary if there is, if the primary does not survive. But what if you have a form that doesn't allow for that? Who do you intend to get? What is there a charity that you'd wish to have? Some of those well earned and well saved and invested? 2 and a half million dollars. So if you don't have kids and you want it just to be as simple as possible, at the very least you're keeping everything out of probate. But if you have goals you would have in an unexpected circumstance, those may best be met with a simple will structure. Just a thought said by a non lawyer. And I can't believe how good the NFC north was in the regular season. Incredible. I couldn't let this go by without an NFL reference coming ahead. I want to talk about your 401k when you change a job.

[Unknown]

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[Don McDonald]

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[Krista]

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[Clark Howard]

Last year I was talking about how people have no idea what to do with their 401k when they leave a job, when they go to a new job. And the velocity of how often people change jobs is so much higher than it used to be. So this is a constant question. What happens that old 401k money? I talked about the options you have moving the money to your new employer's plan, moving the money into your own ira, whatever it is. The one thing you don't want to do is spend the money. But now I got a crazy one. This is data that Vanguard put out just a few weeks ago that finds that when people change a job, they end up losing a lot of money towards their future. First things first. What do they do? They don't. People tend to lag on signing up when they're eligible for the new employer's 401k. Some employers have a lag before you can sign up for it. In those cases, I want you doing your own Roth IRA to take the place as a placeholder till you can contribute to the 401k. But listen to this riddle. Vanguard is one of the largest administrators of 401ks there are in the United States. Vanguard's data shows that when people switch a job that the average new job pays 10% more on average than the job they left. But then, ironically enough, when people enroll in the 401k at the new job, they contribute at a lower rate at the new job than they did at the old one. I don't get it. I don't get it. But what I've encouraged you over the years to do is if you can't contribute more than you're only comfortable contributing to a certain amount in an employer provided retirement plan and you get promoted, there is, I've always said I want you at that point to increase the amount you're contributing to the employer provided 401k. Why? Because you're used to living on the level of income you were getting. Now you're going to be making more. And the way Americans spend money, which shows the marginal propensity to consume, when we make more, we magically spend more. So if you, before you have a chance to develop additional spending habits in your life, you increase when you get that pay raise, you increase what you're contributing in the 401k, then you're going to end up much more comfortable financially down the road. When you get that new job, if you end up making 10% more than you were before, I want you contributing 10% more to your 401k. Because if you think the government is going to provide you enough money from Social Security for you to live on in retirement, you know better than that. And I know there are a lot of people say, well, there's not even going to be Social Security when I reach retirement. That's not true. Social Security is just about the most popular thing the government does. It just may not replace enough of your income already and it may replace less of what you need in the future, but it's going to be around. But the responsibility falls back to you and me to think about these things. When you get that Promotion when you get that raise, when you get that new job that pays better than your old job, build money for your future. You're not going to miss it if you increase those contributions right when you get that promotion or right when you get that better paying job. I promise.

[Unknown]

Okay. Kathy in Florida says we were given a special one year deal to BJ's. BJ's for $20. So we joined. Do you have any research concerning BJ's Home Improvement Services? Can we actually get a quality bathroom or kitchen out of them? Are we better off concentrating our efforts on local contractors? And I think this is true of all the warehouse clubs.

[Clark Howard]

It's not just the warehouse clubs. Think how many times we've had this about Home Depot, Lowe's, you know, with the contractor programs. My opinion, my modest opinion is I much prefer that you get quotes from local contractors that you have references from. If you're doing a simple home improvement, like you're putting in a new garage door or something like that, you're fine using the programs at the warehouse clubs. But if you're getting into a major redo of a bathroom or a kitchen, I think really looking for a contractor who's local, who you have checked out references, you've looked at jobs they've done, I think that's a better path. I'm not saying you're going to get a bad job through PJ's Wholesale or one of the other warehouse clubs or from Home Depot or Lowe's. I just find that when something goes wrong, when we've dealt with this with the home improvement retailers, they have been very difficult to work with and they've not liked somebody trying to hold them accountable for people having hired a contractor through them. I have no complaints that I've ever experienced with any of these home improvement services from a warehouse club, but I would be concerned about the same thing.

[Unknown]

A couple of 529 questions for you. Tara in Ohio says, I have a question about 529s for an older high school student. My husband and I are finally in a position to start saving some money to help our children pay for college. Unfortunately, we are starting late. We have two kids, one in 10th grade and one in 8th grade. What is the best way to start saving for them? Ohio's 529 is on your dean's list. But with only two years left before graduation, is it worth opening one up for the 10th grader now? Or would it be better to put some money into a high yield savings account to ensure we don't lose any value. We want the money to grow as much as it can, but are unsure of the best route to go since Most of the 529 advice we find is for parents with younger children.

[Clark Howard]

So Tara, thank you for this question because I do hear from a lot of parents of middle schoolers and high schoolers who say, I'm just starting out, should I do the 529? And almost always the balance tilts towards doing the 529. Ohio, also, as you may have seen in our guide, is one of the states that gives a state tax deduction for contributions to the 529. Don't remember what the limit is.

[Unknown]

4000 per child per year.

[Clark Howard]

So you definitely want to do the 529 because the money grows tax free. It's spent tax free. You put money in a high yield savings account and you're earning 4 point whatever percent. The earnings on that are taxed at ordinary income tax rates, which is an ugly tax rate.529 used for education tax free. So you get the tax deduction on your Ohio income tax and you get the tax free growth. Now let's deal with what you were saying about the risk. If you go into the age based portfolio or expect an enrollment portfolio, whatever each state calls it, and you put your money in that for your 10th grader and your 8th grader, the money is put into things that have extremely low risk for the 10th grader, appropriate risk for the 8th grader, and the odds are overwhelming that you'll make decent money on it with minimal risk. So in your case, definitely I would do the Ohio 529 plan.

[Unknown]

Mindy in Hawaii says Aloha Clark. I'm in my early 40s and plan to go to law school part time for a Juris Doctorate degree in the fall of 2026 while working at my federal job, should I consider opening I love this.

[Clark Howard]

I know in your 40s you're going to go to law school.

[Unknown]

Should I consider opening a 529 plan for myself? I have no kids to start saving for the high price of tuition.

[Clark Howard]

Yes.

[Unknown]

Or plan on taking out loans and pay down the costs and funds that I've saved with funds I've saved in my Vanguard brokerage account. I'll try for scholarships and grants, but I make a healthy income and do not foresee getting much support from financial need based opportunities. But it would still require several years to pay off because tuition's so high. I appreciate your advice.

[Clark Howard]

Okay, so I have the craziest question as A federal employee. Is there not a need for lawyers in the federal agency you're in or with another federal agency you might be willing to work for in Hawaii where they would reimburse tuition in return for so many years worked after you complete law school. I mean that could be a great, great path for you if there was a program that you were eligible for either where you already work or where you'd work later. And I don't know exactly how you track that down, but if there's a group of lawyers working for the federal agency you're with, you should ask them if there's any program that reimbursed for the education that they had becoming a lawyer in return for agreeing to work for the federal government for so many years. But the question you actually asked about doing the 529 you're going to be in law school for a number of years. You're not starting law school for more than a year and a half. And for the same reason I said for the Ohio kids is to your advantage as an adult to have a 529 that you own is yourself as beneficiary that can grow tax free till you enter school, maybe use it later in law school. So it has continued tax free growth. And so what you can put in there is money you'll use for law school obviously, but it'll have time to grow tax free. And I hope that you enjoy law school. Of things I would have been incapable of. Let's see, which professional degree would I have been less capable of? Both being a lawyer but much more being a doctor. I just don't have the right skill set to be either a lawyer or a doctor. But I hope that your time in law school is great. Part time usually for people aren't aware is usually four years of year round schooling in order to complete law school while you're also working full time. You've got incredible dedication to start this journey and I hope you love it. Loved having an opportunity to visit with you today and I hope that you have an absolutely fantastic weekend in front of you and know that we're here to serve you every weekend with our free newsletters as we are throughout the week as well our clark.com newsletter our clark Deals newsletter and you can see how to subscribe to our newsletters which are [e-mail] newsletters or newsletter both will get you there. Try them out and see if we can't make your weekend more informative. And with ClarkDeals help you find great deals on things that you need or if you can afford it, you want. We'll be at your service next week. And know what we're all about you learning ways to save more, spend less and avoid getting ripped off.