05.24.23 Retailers Responding With DISCOUNTS / Fraud Protection For Seniors

It's my pleasure to welcome you to the Clark Howard Show, where our missions deserve you and empower you to make better financial decisions in your life. I hope one of those decisions that will help you save more and spend less and avoid getting ripped off is to sign up for our free newsletters at clark.com slash newsletters. I want you to know our team takes your invitation to your inbox very seriously. Our content, I believe in so much. Everything about what we do at clark.com is to serve you where what we write is where our head and our heart meet, where we are striving every single item you read to give you information that empowers you in your life, gives you more control over your life and your wallet. In this episode, I want to talk about how we've all been kind of beat up by inflation. There's almost like a PTSD is such an overused word, but there's like a trauma that follows an inflationary cycle. We're not out of the inflationary cycle yet, but parts of the economy clearly are. I want to tell you about the deals that are sitting there right now. And later, oh man, I am a long loyal member of Navy Federal Credit Union, the largest credit union in the world. They're being sued over something involving elder abuse that I want to share with you. And it's a caution not about Navy Federal, but any financial institution in the United States, any brokerage in the United States. There's something you got to know that I'm going to share with you coming up. So right now, I want to talk about how retailers are taking it on the chin. Retailers are having to significantly discount merchandise within their four walls or online. Retailers and reports to analysts and in quarterly earnings reports are not happy. They're singing the blues that there could be some red ink coming at many retailers because Americans are so into experiences right now that we're not shopping like we used to. I mean, one retailer after another is falling all over itself, laying off people. Amazon laying off more people than anybody else, closing facilities all over the world. I mean, they had ramped up at an unprecedented rate. There's never been anything in retail like what Amazon did ramping up during the pandemic. And now there's a hangover from it. And this is true retailer after retailer after retailer, even if the pandemic was a neutral event for them, a positive event or a negative event, the post pandemic conditions are really rough for retailers. So what's that mean for you? It means discounts, discounts, discounts. Retailers are having to do so much to try to lure people in and get people to buy. And so every form of discounting you can think of is going on. Special promotions, if you go in and shop on a particular day or your old items purchased today get you this much off, items being discounted more than they've been in the last four years. I mean, we are in a trend cycle with most retail that is extremely favorable to you as a consumer if you can afford to spend. That's the if, you know, always have to be careful when I say bargains, bargains, bargains. But if your wallet is really stretched, if you're wheezing financially, ignore all that. But what it does mean, there are necessities you have to buy anyway, and many of the necessities you have to buy are now available at better and better prices. I look at what's going on with the supermarkets as an example where inflation, some of you got to eat. And inflation was so brutal in the supermarket aisles and now more and more and more deals at supermarkets every time you walk in, which has not been the recent experience. But anything discretionary, anything you buy to a general retailer, Costco just reported bad numbers. Home Depot reported bad numbers. These are two retailers that have been going great guns and they're experiencing the slow down. Clothing retailers across all clothing lines, they're having a really rough time. By the way, oddly, the only retailers that are still doing really well are some of the ultra high end retailers, the boutiquey kind of things that sell very, very, very expensive stuff that a single item exceeds my entire closet of clothing. That doesn't say much does it, Krista? You're pretty thrifty with your clothing prices, for sure. Yeah. My wife has begged me our entire 28 years together to allow her to do the wardrobe shopping for me. And that's been a big no. You should at least give her a few outfits, I would think. She has bought you a few things. You talk about that. I mean, she has incredible fashion sense. Well, let's test. Yeah, for sure. But gosh, clothing is not important to me. Well, I wear clothing, but I mean, clothing at where it's not important to me. This would be an entirely different show if that were the case. God, nobody needs to see. Even think about that image. Anyway, yeah, I just am not somebody who values clothing and I certainly don't spend a lot of money on it, which is obviously clear. If you're watching the video version of the podcast, you know how true that is. I'm wearing a $6.91 shirt, $6 shorts, $1.11 for my socks. How about your sneakers? My sneakers, I buy these on eBay or Amazon. These are Sockenies. And what I do is I buy a style that was not desired, but the running stores have so many different types. So I wear a Sockenie that's in a color that nobody wants. Oh, I think it's very nice. How much does this cost? So these were those of you who watch the video version of the podcast. It's holding up a shoe. This is my shoe. Those of you who listen to audio only, what you're seeing is you're seeing a very bland, is that navy blue shoe? This navy with a little bit of red accent. It's very nice looking. Really? Yeah. How much was that one? These were 39. Okay. This outfit is known as the Clarka Forum. I named it that a long time ago. Oh, you claim credit for Clarka Forum? I do claim credit for Clarka Forum. Okay, I'll give you credit. The whole point of all that retail is hurting, which means you stretch every dollar. Dean in Alabama says, my wife and I both work. I make 170,000 and she makes just over 200,000. If we were divorced, would we be better off tax-wise? Now in a retirement, if we both withdraw $75,000 a year in retirement, would we pay substantially less income tax? Okay. This is a question that I've been asked for decades because, okay, this is the really crazy thing, when the tax code was designed long ago, there was an assumption that there would be a single income or an earn a household or a big disparity in income between the husband and wife. Well, today people live all different living arrangements and the incomes, the disparity is so different now than it was then. You have in couples often, in your case, you have very similar incomes. She earns more than you. That's true like in a third of couples that are a man and a woman is that the woman will earn more than the man. But there's a lot more equality in that earning. So the tax code was designed to benefit married couples. And today in couples where there are substantially similar incomes, the tax code now discriminates against you both while you're working and potentially in retirement. So it's very unsentimental and unromantic, but like people who meet later in life often will choose not to get married even if they live together because it would cost them too much money to get married. And that's tragic in my mind that that would be how it works. I mean, Dean, the answer to your question is you just run, if you use tax prep software or use an accountant, you can pretty easily figure out is filing, each of you filing single, is that going to save you money and how much? And then you can make a decision to decide, well, for financial reasons, we're going to get divorced, but continue to live together. And what a crazy thing for people to have to consider. Okay. We'll go to Lorraine in Georgia's question. She says, I've noticed at a pharmacy, I purchased from regularly that they round up the tax by a penny at times. For example, here's an instance, $3.74 subtotal with 3% tax is 0.1122. They charge $0.12. I contacted them via email and the response was that sales tax is calculated in a range. $2.84 to $3.16 is taxed at a rate of $0.09. Depending on the exact cost in this range, it could be rounded up or down. And in your case, it was rounded up. That was a summary of the response. I don't know what the other ranges are. I mainly have specifically asked about this one charge. This happens at different locations and on different days. My question is, are they allowed to do this? I realize it's only one penny, but it adds up if they have a lot of consumers in a day. Okay, Lorraine, first of all, you're my hero. You obviously are great with money. If you are calculating that they're charging you $0.01 too much instead of rounding down rounding up, you're really good at saving and watching every penny. Second, states will drive you to distraction with their formulas for sales tax. And the formulas, there are times that a retailer is using tax software for calculating sales tax that will do automatic rounding up potentially. But often it is, as you were told, there will be these bands that states will use, BANDS, where the tax is allocated based in a range. And so people at the low end of the range or overpaying people at the high end of the range are essentially underpaying. And it goes back to before we had all the automation we have today. And that's why these old tax tables for sales tax and states will have these anomalies where you're paying a penny more here, a penny less there. But my thing is I'm thrilled by you because obviously you are an incredible manager of your money. Okay. And AG Minnesota has a question that affects a lot of people. He says, you talk about a lot about life insurance, but you don't mention what one should do if denied coverage. I was recently diagnosed with bipolar depression. I'm sorry. In the late 30s, no kids are spouse. I currently have a $250,000 net worth and plan to leave my money to select family members. Most insurance companies deny people with bipolar depression. Two questions. Do I need life insurance? I have no kids, no spouse. And what do you recommend for people who get denied? I don't have an option to get it from work. Okay. And as you are aware, there are great protocols and medications now for bipolar depression. I hope that you are having good management with it and that you're able to have a good sense of control of your mental health. That's what's great is that people can now with proper care and proper medication be a-ok. And I wish that for you. On the life insurance, the purpose of life insurance principally is replacement of income. Without significant other spouse, without kids, you don't have what would be a primary cause or case to have life insurance. You have assets. Those assets. You can leave those to your select family members just as you plan. So you don't have a compelling need for life insurance. But let's say you were in a position that there was significant other spouse, whatever you wanted to leave money to to deal with life's expenses and you wanted life insurance in a situation where you have a preexisting medical condition, you go to an insurance agent who knows the industry well enough has been at it a long time and they know the underwriting standards of different insurers. And that agent would be able to shop for you and find who would be appropriate who is willing to quote your in your case your preexisting medical condition bipolar depression and then they can sell you a policy. But in your case, I don't see it as being a high priority or really a priority because there's no one who needs the replacement of income. Coming up straight ahead, I want to talk about something that has always angered me to my core. It's the slime, the disgusting excuse for human beings who rip off vulnerable elderly people. And I want to talk about what you've got to do because there's not an effective cop on the beat. At the end of your first year, discover credit cards automatically double all the cashback you've earned. That's right, everything you've earned doubled all the cashback from eating at your favorite soup dumpling restaurant doubled all the cashback from that trip where you've sort of learned a snowboard also doubled. In the best part, you don't have to do anything ridiculous to get it. Nope, discover does it automatically. Seriously though, see terms and check it out for yourself at discover.com slash match. There was a USA Today story recently so disturbing to me. It involved a gentleman who had been a commander in the US Navy, served the US Navy with distinction, honored our nation with his service for 24 years, retired in 1992. This gentleman had no spouse, no kids and developed enormous wealth, always lived. My careful life was a very diligent investor and built up millions of dollars. Problem was he had developed dementia and criminals, con artists had targeted him and stole millions of dollars from him discovered by an adult niece. And the two financial institutions that he was doing business with Wells Fargo and Navy Federal Credit Union both did what they required to buy law that they in fact notified government authorities. He lived in the state of Virginia, notified government authorities in the state of Virginia that they're required to do now at financial institutions when they believe one of their customers has lost mental reasoning or mental capability. So they reported it to the state of Virginia, but continued to send money out of the accounts of this retired Navy commander till virtually every penny that Larry Cook, commander Cook retired US Navy did so much for his country. Navy Federal and Wells Fargo continued even though they already knew that he had diminished mental capacity, continued to wire money out to the crooks one wire after another till they'd stolen $3.6 million, which his niece discovered as she tried to take care of his affairs after he passed away at 76 years old. Both Navy Federal and Wells are being sued over their failure to live up to their legal duty and responsibility, both refused to comment. And this happens again and again and again. And ultimately in court, all the details will come out over time. And it's not to pick on Wells Fargo and Navy Federal alone because this happens again and again that we're asking a lot of financial institutions and brokerages, but they're who the criminals use as their gateway to steal the money of America's elderly. They've got to do more. We trust our banks and credit unions and brokerages with our life savings, our life's money, and they've got to do a better job. In a family, it's hard. We're busy. And again, as I've said, on many occasions, we're spread all over the country and we lose that touch. So the banks are playing something that I think comes from Latin in loco parentes. They fill in. Chris is going to look that up for me. The banks under the law because they're the gateway to help the criminals steal the money. The banks have a duty under law acting or done in the place of a parent. It can't be halfway done and know that this happens again and again that the banks, the brokerages and credit unions fall down on the job. That's why family has got to be involved. Usually it's not going to be an adult niece like this. It's going to be adult children who are only going to discover the ugliness after a parent goes into assisted living or a parent passes away. It's passed too late. That money takes a one-way trip. The criminals are clever. They steal that money and they get away with it almost always. So knowing that the people who are given the end loco parentes responsibility, the bank's credit unions and brokerages don't do what the law requires means that it's up to family members to stay involved and as I say, be nosy with your aging relatives. Krista. That is most definitely Latin for sure. Do you know that was like the only course in school? I got an A&I was number one in my class in Latin in high school. Wow. I didn't know you took Latin. Yeah, I took two years of Latin. I remember very little of it. That's great. That's very good for building your vocabulary too. Which is funny since I have no useful vocabulary. Yes, you do. Okay. We'll go to questions. Charles in Texas says, I was lucky enough to have some extra cash on hand and my financial advisor mentioned something called Structured Notes. I am a CPA and have experienced in the financial services industry and I'd never heard of Structured Notes until now. After some quick research, I decided against these investments but I would love to hear your take on these products. In P.S. we bought a new larger home and a great elementary school zone for our son instead of buying these Structured Notes. Charles, thank goodness. Structured Notes are snake oil from the brokerages and financial people trying to score extra money. Structured Notes are sold as this great, great, great way to squeeze extra return with leverage from traditional investments. The smooth talking salespeople pitch them so hard. What's wrong with Structured Notes? Well, let me count the ways. One, they generally don't have an easy market to buy and sell in. They're not well traveled, well traded. Which means you don't have a true marketable investment. So if you decide you want out, it's not an easy way out. They tend to have very, very, very high embedded fees. So we got two strikes. What's the third strike? Structured Notes very commonly default, meaning you lose your money. That smooth talking sales person pitching the leverage to you. leverage is a method where they do, we can get into other investing words, they get involved in derivatives and all the rest. So there is extreme additional risk that could lead in an up market to greater reward. But often your money goes hoof. So we're three strikes and we're out. I'm glad I get very few questions about Structured Notes because I hate them. Let's see what's done to my heart rate. Oops. Just talking about it, it's like somebody mentions that cuss word annuities and I can look at my heart rate on my Garmin fitness tracker and I can see it goes up. I'm going to take that deep breath. It sounds like Charles' financial advisor is not a fiduciary. I would say there's certainty that Charles' financial advisor is with a high commission, non-fiduciary brokerage house. Could be a very nice person. They may even believe that Structured Notes are a good choice. I believe they're garbage. Okay. Matt in Illinois says my children's grandparents have graciously funded a 529 in the state of Illinois in their name for the benefit of their grandchildren. However, against my recommendation, they insisted on opening the 529 plans through their advisor at a also non-fiduciary. Ultra high commission non-fiduciary stockbroker. How can I find out how high the management fees are for this advisor managed plan versus the self managed plan? I have searched the paperwork and the fee structure is not listed. Our 529 plans are self managed but the grandparents insist on having it in their name and would not allow me to help them open a self managed plan in their name. It is a possible point of contention and I do not want to overstep my balance. Okay. So this is overstepping your balance because the generous in-laws are putting money aside for your kids from their hard earned money. The 529 plan they're putting money in is terrible just as you suspect. It has costs many, many times what a good 529 plan would cost. They charge huge commissions on the plan and this is a never rule. There is never a circumstance, never that is appropriate to buy a 529 plan through a commission salesman person. Never, never, not ever. 529 plans are simple streamline plans. They should only be bought direct sold. You look on our 529 plan guide at Clark.com that we just updated again. You will never find a 529 plan that is commission sold. We only post direct sold. That's the only kind you should buy. So in this case, you're right but you're fighting a battle you should not be fighting. The plan is terrible. Just zip up your lips and deal with the fact that the plan is atrocious because even though it has monstrous expenses, it's money that is coming from your in-laws for the benefit of your kids and you don't want to do anything that discourages them from doing so. And if they love this ultra high commission non fiduciary broker, then let them love them, let them put the money aside. And yes, you could have more money for your kids college if they weren't using what to me is a lousy choice. The reality is the main choice they've made to put money in the plan is so good for your kids. Just let them do it. Jim in California says, I heard your commentary on the question, does money make you happy? Would you give some advice on your idea of the best way to handle major lottery winnings? I'm talking a hundred thousand dollars and up. Can you give three, four, or five top things to do with lottery winnings that are of that magnitude? Here's what I would do. One, I would structure my winnings to pay out annually over the next 20 or 30 years if possible. Two, I would figure out how much I really needed to live on each month for the rest of my life and invest enough of my winnings to create an immediate annuity. I would pay off all my bills and obligations, including my mortgage, four, make sure my mom is taken care of, and five, go to Disneyland. What would you do, Clark? Well, obviously the order is wrong because if you've ever watched after a Super Bowl, the first thing you do is go to Disneyland or Disney World if you're at the MVP and the Super Bowl because everything I know in life comes from football, right? Okay. I have some simple rules for lottery winners. And as any person would tell you who's ever been involved with lottery winners, if you're allowed in a state, and so I'm treating this as a serious question, if you are allowed in the state in which you live to remain anonymous when you win a lottery, stay anonymous. Most states do permit that. Number two, don't tell anybody at work, family, friends. You will be amazed at the 17th cousins. Cousins go to 17th. I don't know. Probably. Whatever. I mean, suddenly you're related to everybody on planet Earth as soon as you win a big lottery. Or you sign like an NFL contract or something. Yeah. Oh man. Yeah. A lot of hangers on suddenly appear in your life on to rise as they call it in sports. The next thing is you want to hire a lawyer and you want to hire a fee only fiduciary financial planner. I love the idea even though every fiduciary financial advisor, every lawyer will say I'm wrong about doing the first thing you said, taking the payout over the 20, 30 years, whatever it is. I prefer that because it creates almost like an allowance for you. So many lottery winners end up bankrupt within years of having won a lottery, a big pile which is shocking. Never want you to take that money and say, I always want to start this business or own that business or whatever. Don't become the instant entrepreneur with that money. I want you to take 10% of lottery winnings and be as crazy with it as you want to be, as crazy as you want to be. Do whatever with it. You always want to own a big boat. Go buy a big boat, whatever it is. 10% of the money be crazy. The other 90%, I want you to use the fee only fiduciary financial planner to come up with an investment plan, a state plan, retirement plan, etc., etc., etc. So that the idea is that the money has legs, that it doesn't get extinguished and that you don't become, it was a movie long ago, The Jerk. It was a 1980s movie or 70s. Deep Martin. Yeah. People kept giving their stories about why he should give the money and what everyone was about cats that are being, what was happening in the cats? I didn't remember. I haven't seen it. I haven't seen it. I mean, this priest comes and shows him this video. He said, stop it, stop it. This is brutality to cats. So he gives them all this money. It's like that's why anonymity is so key. If charity is what's key to you, you make that clear to your financial advisor fiduciary fee only and your lawyer that donating to charity is a core principle of what you want to do. Okay. So I'm just going to ask you though, say you know you have your retirement and everything else taken care of. Somebody gives you $100,000 and the only thing you can do with it is something fun. You know what I mean? Like you can't, you've already got charities covered because I know you would say, you would give it away. What would you do to blow it? 100,000. Oh, I know. What? Remember we had somebody post about the only kind of not been to his end article. And you were going to say this. Yeah. And I won't do it because passing through the Drake passage is just, could you just watch the videos on YouTube? I mean, I don't normally get motion sick. I'm not going through those waves. Yeah. And so this person wrote in and said, you know, you can do this trip where you fly into way past the Drake passage and then you get on a boat. And then I went and looked to see what it costs to do that. I'm not spending the money. But if you said, here's $100,000, you have to use it on something fun. I would use it to overfly the Drake passage and get on a boat there where things are calm and serene and you're already right on the edge of Antarctica. So that would be the most frivolous thing I could do in my life. But I can't imagine I'll ever spend the money because that just seems like a bridge too far. It's so expensive to take one of those trips. I love it. You do love that? Because I thought that sounded really self-indulgent. No, it's supposed to be. That's the idea I asked you to be self-indulgent. And you're so excited about the idea of it. I think you should do it, but that's just me. All right. So we're being so light-hearted here and all the rest. But I know many of you are not in a light-hearted moment in your life. You're trying to recover from debt. You have other financial issues. And we talk about things that are light-hearted sometimes. We talk about things that are just so serious, like the former retired Navy commander who had his money looted as his mental capacities declined. I mean, life is not one thing. It's so many things. If your life feels messy right now, if it feels hard, particularly financially, remember one day at a time, one decision at a time, you rebuild your finances. Don't let it overwhelm you. Know that time gives you the power to heal in so many ways, including emotionally and financially. So just take it little teeny bites at a time and work your way through that financial storm. And on the other side, it gets better. Have a plan to get out of those debts and you'll be fine. The core of what we're about is giving you the power to save more through your life, to spend less day to day and never ever get ripped off. Have a great day. ♪♪♪♪