. I wrapped up my 2024 income and expenses a little late this year. I always glean little insights by doing this analysis after tracking my numers all year long.
1st Tier Expenses ($912-$7,194)
Let's look at what I call my 1st tier expenses. These are my 10 biggest expenses ranging from $912-$7,194.
Looking at the pie chart I created, I can quickly see that property taxes make up the lion's share, at $7,194; that's a nearly 4% increase from last year.
Next up is Food. I spent $4,717, a level that may have finally plateaued after years of steady increases.
My #3 largest expense is the catch-all category I call Household. It's where I put expenses that don't belong anywhere else. I spent $2,246 in this category, which generally includes things I buy for the house that aren't home improvements, like the $200 office chair.
My #4 biggest expense was Health Insurance ($2,231), which remained very low while I was still on Affordable Careh Act insurance, but once I got on Medicare mid-year, it did increase substantially.
My remaining top 10 expenses included my cat, out-of-pocket medical and dental, electricity, lawn & garden, entertainment and heating oil.
So there were small 2-3% increases in some of these Top 10 expenses with the big jump in healthcare expenses, while electric costs and food stayed the same as last year. Surprisingly, my heating oil costs fell by 38%. I was expecting it to be higher since I'm spending a lot more time at home now that I'm retired, but I guess I'll chalk the drop up to market fluctuations.
2nd Tier Expenses ($511-$857)
In my 2nd tier expenses, I saw my homeowners insurance ($850) rise by 27.6%, a reflection of what's going on all over the country; my car insurance ($810) rose by 20%. No claims on either, ever. It's so important to shop regularly, if not every year, for both these insurances.
3rd Tier Expenses ($100-$500)
In my 3rd tier expenses (the smaller stuff representing 1.2% or less of my total budget), I saw my Internet cost rise by 19% due to a price hike which I fought unsuccessfully. My car repair expenses with my old Honda fell by 63% compared to the year before. (Side note: I'm glad I sold the car when I did. While it was running great and had nothing wrong with it, I think it would be due pretty soon for both new tires and a new battery.)
2025 Projections
For 2025, I expect to see my car insurance and car tax especially rise with the purchase of my new Toyota this month. (Side note: Surprisingly, I only had to pay $200 more to apply the same insurance coverage I had on my 11-year-old Honda to my 2024 Toyota. So that will see me through August, when a new, unknown premium will be due.) Health insurance and out-of-pocket medical expenses will also increase in 2025 as my first full year of being on Medicare.
I would LIKE to see my monthly electric costs drop as they had done for a while following the purchase of my heat pump water heater one year ago, but the utility company also raised its rates.
2024 seemed like a brutal year for rising prices everywhere, so it was nice to see a few categories where mine fell, not necessarily for the right reasons: A 12% drop in cat-related costs since he passed during 2024. A 62% drop in lawn & garden costs, simply because I didn't need to have any tree work done, so most of this expense was for lawn mowings. The aforementioned 38% drop in heating oil costs was nice to see, as was the 67% drop in maintenance costs (a random thing), the 32% drop in clothing purchases, the 26% drop in dining out and the 63% drop in car upkeep. There were a few other drops in other categories, but they are inconsequential.
My total expenses for the year were $41,645. That's $1206 less than last year, but I'm trying to get away from focusing on this since I am moving this year from the "save" mentality to the "spend and enjoy it" mentality.
January 10th, 2025 at 08:02 pm 1736539376
January 10th, 2025 at 10:07 pm 1736546843
If you are waiting to takecSocial Security, then that is a few years away but coming.
The major cost of car insurance is actually the medical and liability coverage, which stays the same regardless of the vehicle insured. (Is impacted by age and experience of driver, miles driven) Vehicle replacement is often the ‘cheapest’ outlay from a serious accident, and the insurers share drops each year due to vehicle depreciation.
January 10th, 2025 at 11:59 pm 1736553559
Not surprisingly then, food is my #1 biggest ticket item. Not gonna lie, I fight a losing battle here. In fact, I'd rather not elaborate because it's such a bloodbath, BUT if you are averaging under $400 a month, I say you are doing fantastic!
Can you please elaborate on the transition from ACA to Medicare? Is this transition mandatory somehow? Why does it cost more? Is it any better than the ACA?
January 11th, 2025 at 12:49 am 1736556586
You think I'm doing good in my food expenses? How much more can yours be? Ha ha, you don't have to share, though I am curious.
When you have ACA, if your income is low enough, you're eligible for subsidies that bring the overall cost of your health insurance down. So I took pains to keep my income low for the past few years before retirement when I was working p/t and on ACA, earning no more than about $40K, in order to qualify for subsidies, the amount of which depends on your specific income. You can actually qualify for subsidies at a pretty high income. I think it's meant to help middle class Americans afford their health coverage better.
You can only stay on ACA if you're working, so once you turn 65, unless you have a good plan that you like through an employer and you're still working, you would want to choose either traditional Medicare, which I have, or Medicare Advantage.
I joined a FB group hosted by an insurance agency very well versed in both. Medicare.gov is a well organized and easy to understand website, so definitely use that as a resource when the time comes. They make it super easy to use. Traditional Medicare tends to cost more than Advantage. There are many Advantage insurers who throw in lots of tempting freebies that traditional Medicare just doesn't offer, but the somewhat controversial question is, will they be there to cover you when serious illness or surgery is required?
It's a little hard to track what I'm paying for Medicare, only because there are 3 different bills I get. My Medicare Part B premium is billed quarterly, so it's a big bill, but it comes out to $188.40 a month. Then my Medigap policy, which covers anything traditional Medicare doesn't pay, is $172 a month. My drug plan costs $12.40 a month, so the grand total is $372.98 a month. I've paid more for health insurance in the past, but it's certainly higher than what I was paying with ACA.
Also, someone with a fairly serious or expensive pre-existing condition might want to choose traditional Medicare and then stick with Medicare, becus if you try switching later from one plan to another you may be subject to underwriting and even a denial of coverage.
There's a lot to consider; that's why a FB group like Boomer Benefits that you just see in your feed every so often is a good way to gradually begin learning from others what to look for and what to avoid.
January 12th, 2025 at 06:03 pm 1736705000
https://www.kiplinger.com/retirement/medicare/watch-out-for-the-medigap-trap
January 14th, 2025 at 01:41 am 1736818897
January 19th, 2025 at 01:35 am 1737250512
[By the way, optimal time to shop your property & casualty insurances is about once every 3 years. When you switch, there is a risk of further inspections (and repairs/upgrades) required and tighter requirements. With homeowners insurance, the age of your roof is a big deal--it doesn't matter if you have a roof with a 30-year warranty, if it's more than 10 years old, you'll probably pay higher premiums.]
January 19th, 2025 at 02:36 pm 1737297374
Good points on buying insurance. Although in my 30 years of homeownership, I've never had an inspection. I have noticed, though, that in recent years, they want to know the age of the roof, the age of the furnace and I think once I was asked how close the nearest fire hydrant is. I think the roof is the most important thing. Mine is 12 years old now. Wonder if anyone has analyzed whether it might be worth replacing earlier to save on insurance premiums.
January 21st, 2025 at 01:52 pm 1737467559