The Clark Howard Podcast – Episode Summary (March 31, 2025)

Title: Who Administers Your Retirement Account? / What Happened To Southwest Airlines?

Host: Clark Howard

Introduction

In the March 31, 2025 episode of The Clark Howard Podcast, Clark delves into critical financial topics that impact everyday Americans. The episode is split into two main segments: the administration of retirement accounts, particularly 401(k)s, and a candid discussion about the recent turmoil at Southwest Airlines. Through expert analysis, listener interactions, and personal anecdotes, Clark provides valuable insights aimed at empowering listeners to make informed financial decisions.

Segment 1: Who Administers Your Retirement Account?

Key Discussion Points:

• Importance of 401(k) Administration: Clark emphasizes the significance of understanding who manages your 401(k) and how administrative and investment fees can dramatically affect retirement savings over time.

  "Over time, the cost that you have to pay embedded in the investments or administrative fees in a 401k have such a giant impact on the hard earned money you divert into that plan, how much you're going to have down the road." ()

• Low-Cost vs. High-Cost Plans: He contrasts low-cost providers like Fidelity and Vanguard with higher-cost alternatives typically offered by banks and insurance companies. Clark warns that plans with fees above 0.5% are considered high-cost, with those exceeding 1% labeled as ultra high cost.

  "If the plan is a low cost plan, you want to throw money in it. If it's a high cost plan, you want to put in enough to pick up whatever employer match you're getting and then other than that, you want to be in your own Roth IRA." ()

• Roth vs. Traditional 401(k)s: Highlighting the benefits of Roth 401(k)s, Clark advises most listeners to favor Roth options unless their income exceeds specific thresholds (e.g., $250,000 for singles, $500,000 for married couples).

  "Unless you're earning giant money what's giant money for a single individual, a quarter million or more a year... Otherwise you want to be in the Roth 401k you're putting in after tax dollars that will never be taxed again." ()

• Proposed Retirement System Redesign: Clark envisions a more flexible, portable retirement plan system, akin to Roth IRAs but with employer matching features, to provide continuity and cost efficiency.

Notable Insight: Clark underscores that many employers adopt high-cost 401(k) plans not out of malice but due to their relationships with banks or insurance companies, which may offer other financial benefits to the employer.

Segment 2: What Happened To Southwest Airlines?

Key Discussion Points:

• Private Equity Takeover: Clark expresses his disappointment with Southwest Airlines, attributing the airline's decline to interference from private equity firms. He feels that these changes have stripped Southwest of its unique, customer-friendly identity.

  "These private equity clowns came in and have really messed up Southwest... Everything they've done from these private equity clowns is cruel to the customers." ()

• Loss of Unique Selling Points: Southwest's shift towards mimicking larger airlines like American, United, and Delta has led to the introduction of unpopular policies, such as additional fees and devaluation of the Rapid Rewards program.

  "They decided... we're going to mimic them. We're going to be a me too. And we're going to have all kinds of gotchas and junk fees... they've devalued our rapid rewards frequent flyer program by 75%." ()

• Impact on Customer Loyalty: Clark laments that loyal Southwest customers may start migrating to other airlines due to these negative changes, predicting a rough period ahead for both passengers and the airline.

  "Loyalty should be a two way street, right? Right now it's a one way street and what we got coming towards us is a freight train." ()

• Personal Anecdote: Using humor and personal feelings, Clark likens his relationship with Southwest Airlines to a rocky romantic relationship, highlighting his emotional investment in the airline's legacy.

  "Southwest has been so much a part of our family's travel for a generation is just really stinking." ()

Listener Interaction:

A listener from New York, Ben, inquires about whether to upgrade his Southwest Rapid Rewards card amidst the airline's deteriorating service. Clark advises caution, suggesting that while maintaining the card for existing benefits like free checked bags is advantageous, potential future changes might affect its value.

"Time will tell if you end up diverting your business to other airlines or you find that Southwest is still a good choice for you." ()

Listener Questions and Stories

1. Annuities Rep's Misleading Claims
   Listener: Tom from California
   Question: Tom describes an annuities rep promising to turn $500,000 into $100,000 annually for life.
   Clark's Response: Clark debunks the claim, explaining that while deferred annuities offer potential benefits, the projections are often exaggerated and not guaranteed.

   "The only thing you can look at is what the guarantee is... It makes it seem like this is the greatest thing ever. But it'll say probably in little type for illustration purposes only." ()

2. Upgrading Rental Units
   Listener: Tim from Virginia
   Question: Should Tim invest $20,000 in upgrades to his rental property to increase monthly rent by $500?
   Clark's Response: He approves the investment, highlighting a good return on investment within three years, provided the property doesn't remain vacant for extended periods during renovations.

   "You would get a payback... making back the cost and a little more than three years." ()

3. Jonathan's Success Story
   Listener: Jonathan from Florida
   Story: Jonathan shares his journey from having significant debt and credit issues to achieving an 800 credit score and stable financial footing by following Clark's advice.
   Clark's Response: He commends Jonathan's determination and reinforces the effectiveness of disciplined financial habits.

   "You learn to live on less than what you make, which is exactly what you've done." ()

4. Traveling to Ireland
   Listener: Armand from Texas
   Question: Armand seeks advice on booking flights to Dublin and navigating Ireland's transportation system.
   Clark's Response: Clark advises booking international flights slightly earlier than domestic ones and suggests considering alternative departure cities like New York or Boston for better fares. He humorously cautions about driving in Ireland.

   "Set up a fare alert for fares from Austin to Dublin... You may find a fare out of Boston or New York." ()

5. Paxlovid and Medicare Costs
   Listener: Janice from Georgia
   Question: Janice is shocked by the high cost of Paxlovid despite having Medicare and seeks clarification.
   Clark's Response: He clarifies the confusion surrounding Paxlovid pricing, highlights the government assistance program offering free Paxlovid to eligible Medicare beneficiaries, and emphasizes the importance of seeking assistance to avoid exorbitant costs.

   "If you are interested in taking Paxlovid... it's something that's kind of like taking what's one for the flu that you have to take early." ()

Advertisements Skipped

Throughout the episode, several advertisements were aired, including promotions for the Apple Card, Venmo Debit Card, and Progressive Insurance. Following the system's instructions, these were omitted from the summary to focus solely on the podcast's content.

Conclusion

Clark wraps up the episode by reiterating his mission to empower listeners with financial knowledge to save more, spend less, and avoid scams. He encourages audience engagement through his Consumer Action Center and previews topics for the next show.

"What you should be doing, empowering yourself with knowledge so you can save more, spend less and avoid getting ripped off." ()

Notable Quotes with Timestamps

• "Over time, the cost that you have to pay embedded in the investments or administrative fees in a 401k have such a giant impact on the hard earned money you divert into that plan, how much you're going to have down the road." ()

• "Unless you're earning giant money what's giant money for a single individual, a quarter million or more a year... Otherwise you want to be in the Roth 401k you're putting in after tax dollars that will never be taxed again." ()

• "These private equity clowns came in and have really messed up Southwest... Everything they've done from these private equity clowns is cruel to the customers." ()

• "Time will tell if you end up diverting your business to other airlines or you find that Southwest is still a good choice for you." ()

• "If you are interested in taking Paxlovid... it's something that's kind of like taking what's one for the flu that you have to take early." ()

Final Thoughts: This episode of The Clark Howard Podcast provides listeners with crucial information on managing retirement accounts effectively and offers a heartfelt critique of recent changes at Southwest Airlines. Through a blend of expert advice, listener stories, and personal reflections, Clark continues to deliver content that is both informative and relatable, reinforcing his commitment to helping consumers achieve financial well-being.