Federated Learning (FL) has emerged as a promising paradigm for collaborative model training without the need to share clients' personal data, thereby preserving privacy. However, the non-IID nature of the clients' data introduces major challenges for FL, highlighting the importance of personalized federated learning (PFL) methods. In PFL, models are trained to cater to specific feature distributions present in the population data. A notable method for PFL is the Iterative Federated Clustering Algorithm (IFCA), which mitigates the concerns associated with the non-IID-ness by grouping clients with similar data distributions. While it has been shown that IFCA enhances both accuracy and fairness, its strategy of dividing the population into smaller clusters increases vulnerability to Membership Inference Attacks (MIA), particularly among minorities with limited training samples. In this paper, we introduce IFCA-MIR, an improved version of IFCA that integrates MIA risk assessment into the clustering process. Allowing clients to select clusters based on both model performance and MIA vulnerability, IFCA-MIR achieves an improved performance with respect to accuracy, fairness, and privacy. We demonstrate that IFCA-MIR significantly reduces MIA risk while maintaining comparable model accuracy and fairness as the original IFCA.