01.07.26 What Early Tax Filers Need To Know / When To Take Social Security - The Clark Howard Podcast Recap

Podcast: The Clark Howard Podcast

Published: 2026-01-07

Duration: 29 minutes

Summary

Clark Howard discusses the importance of understanding tax filing options and why delaying Social Security benefits until age 70 can be financially beneficial. He highlights the Free File system for tax preparations and addresses concerns about Social Security longevity.

What Happened

Clark Howard kicks off the episode by addressing the confusion surrounding tax filing options, specifically the difference between the IRS's Direct File and Free File offerings. Despite common misconceptions, Free File remains available, allowing eligible taxpayers to prepare and file their returns for free, potentially including state taxes. Howard emphasizes that about 65-70% of taxpayers qualify for this service, though many are unaware of it.

The episode transitions to personal finance questions from listeners. One listener from Texas wonders about the wisdom of paying off a 3% mortgage early, despite having sufficient savings. Howard advises considering the interest rates on savings versus the mortgage rate, suggesting that if the savings rate is lower, paying off the mortgage might be psychologically satisfying despite conventional advice.

Another listener contemplates selling rental properties due to management stress, even though they are profitable. Howard acknowledges the challenges of being a landlord and suggests evaluating current real estate market conditions before making a decision, noting that Texas markets vary significantly.

Howard also discusses document shredding practices, advising that credit card offers should be shredded unless credit is frozen, which provides a layer of security against identity theft. He stresses the importance of freezing credit as a preventative measure.

In a more controversial segment, Howard advocates for delaying Social Security benefits until age 70, which increases monthly benefits by 77% compared to claiming at 62. He acknowledges the break-even point of age 83 and the fact that many people live past this age, making the delay beneficial for those who can afford to wait.

Howard fields questions about Health Savings Accounts (HSAs), recommending continued contributions as they offer tax-free growth and future medical expense coverage. He reassures a listener about the security of their credit card limit despite receiving a reduction notice, explaining it's a precautionary step by issuers amid rising default rates. Finally, Howard touches on credit score improvement programs through rent and utility payment reporting, noting their limited impact on lenders' decisions currently.

Key Insights

• Approximately 65-70% of taxpayers qualify for the IRS's Free File program, which allows eligible individuals to prepare and file their federal and potentially state tax returns at no cost.
• Delaying Social Security benefits until age 70 can increase monthly payments by 77% compared to claiming them at age 62, with a break-even point at age 83 for those who live longer.
• Freezing credit is an effective measure against identity theft, making it unnecessary to shred credit card offers, as frozen credit prevents unauthorized accounts from being opened.
• Contributions to Health Savings Accounts (HSAs) offer tax-free growth and can be used for future medical expenses, providing a beneficial savings strategy for healthcare costs.