Dan’s post ‘Insomnia and the Back of an Envelope’ motivated me to review our expenses. Our top five categories are property taxes, home/car insurance, utilities, groceries, and healthcare premiums/deductibles.
- Our home property taxes increased 23% from 2023 to 2025 while our home value increase 17%. The value of our ten-acre plot went down 1.6% from 2023 to 2024, but then increased 23.5% from 2024 to 2025 and property taxes increased by 30%.
- Home insurance went up 46% from 2023 to 2025, while the insured value went up 8%. The car insurance remained unchanged (my car insurance went down $6 and my husband’s went up $59). Surprisingly, our umbrella insurance went up 30% from 2024 to 2025. (no claims, no accidents, no tickets)
- Electric was up 15% even though our usage dropped 1.3% from 2023 to 2024. The other utilities only went up 1%
- My healthcare premiums (Medicare Supplement) went up 9.5% from 2023 to 2024, but my husband’s (Medicare Advantage) remained unchanged. Our dental insurance went up 8.1%. I haven’t seen the increases yet for 2025. The Part B Medicare premium increased from $164.90 in 2023 to $174.70 (5.9%) in 2024, and to $185 (5.9%) in 2025. The Part B Medicare deductible increased from $226 in 2023 to $240 (6.2%) in 2024, and to $257 (7%) in 2025.
These categories make up over half our spending. Adding in groceries gives me the top 5 line items of our spending. Home maintenance hasn’t been an issue since we recently built, but over time, that could be a contender. So going forward, I’ll continue to track these top 5 categories. (Kinda the 80/20 rule.)
In the past, I’ve used a 3% inflation factor to forecast expenses. What inflation factor do you build into your assumptions? Are you seeing higher percentage increases in your top 5 categories of spending?
I’ve been using 3.6% as our inflation factor. The other side of this is expected rate of returns. I’m using 4.5% for tax sheltered accounts and 2.0% for the other accounts which include cash, bonds and stocks. I’m using numbers that imply slightly higher inflation and lower returns. I run these numbers through my planner which is inflation adjusted and a couple of Monte Carlo simulators.
Our top 5 includes certain taxes, so I’ve included the top 6 expense categories for 2024:
1. Rents = 13.56% (decreased 3.6%).
2. Personal Travel = 11.36% (increased 559%).
3. Dining = 9.23% (increased 30%)
4. Insurance non-health = 7.48% (increased 3.6%)
5. Tax = 7.05%
6. Groceries = 6.85%
Personal travel expense increased substantially in 2024, due to care requirements for family.
Some explanation is necessary:
1. “Rent” includes a 10×20 ft. storage unit in Illinois and a resort fee in Arizona. We own our home in the resort. We sold a RV in 2024, eliminating that site rent).
2. “Personal travel” during 2024 included three cross-country long distance travel (air, car rental, motels) for care of a family member and three RV “vacations” totaling about 8,000 miles.
3. “Dining” excludes groceries. Our dining costs have increased as we now have one meal a week dining with friends. We also want to support the restaurant in the resort, dining there for an additional meal each week. Add a few meals in town with other friends each month.
4. “Insurance, non-health” includes home, long term care insurance, insurance for two RVs and for a car. One of the RVs is stationary (we call it our “lily pad”) and the other is a small Class B motorized unit.
5. “Tax” includes Federal and State income taxes as well as personal property tax. It excludes sales tax, Medicare and health insurance premiums.
6. “Groceries” exclude dining.
In 2024 we spent about 68.4% of our income derived from Social Security and Pensions. We spent none of the RMD.
Thanks for sharing, Norman! That was very helpful. Our expenses were at 65%, but this year they increased to 69% of SS and pensions, similar to what you mentioned.
One of my biggest expenses is travel and that has gone up but because I’ve chosen to upgrade my experience so I can’t compare easily. Dining out has gotten out of hand. A few nights ago for a mediocre Italian meal with two glasses of wine at a strip mall Italian restaurant we paid close to $100 which would have been ok but the meal was so unimpressive that it didn’t make sense. Also, a latte used to be about $3 but now it’s $5.
My biggest expenses:
Income tax: 14.87%
Housing: 7.66%
Medical: 4.44%
Car: 4.13%
Food: 2.55%
Property tax is included in housing.
Yes, everything is going up – your income had better go up too! As a director of the village tax board, I just voted to increase my village taxes by 5.85%.