The rise in Per Capita Personal Consumption Expenditures has been continuous for over 50 years. It only stagnates or falls for a short time during recessions.
Adjusting for inflation (Real Per Capital PCE) shows a bumpier story.
I’d like to explore the differences in Cost of Living among METARs. We are not exactly a representative group but our daily expenses probably reflect the broader population. I was shocked to see the very high expenses of @MarkR but he supports a large household.
DH and I live a modest lifestyle in a small ranch-style home (no mortgage) on the remote Olympic Peninsula of WA State – the extreme opposite of where @MarkR lives in south FL. We heat with mostly wood (backed up by hydroelectric) and don’t have air conditioning. We have our own well and septic (which I inspect and have pumped every 4 years when needed). We have a Subaru Impreza and a Ford F-250 pickup.
Our household budget for 2023, not including personal expenses:
It’s funny, but we really do live modestly as well. The high expenses are mostly insurances and tuitions. But our regular expenses are low:
Jan Electric bill - $95 (summer is $250 or so, all electric house, never use heat because resistive heating is ridiculously inefficient and expensive, we use an extra blanket instead)
Mortgage - $1100
Property tax - $5k/yr
Charities - varies from $3k-9k/yr (considering ways to transfer IRA or other money to a DAF in the future)
Food - $1500-2000 (family of 7, all teens/adults, we almost never eat out, all our food is cooked at home)
Other shopping - $600 (Amazon non-food, clothes, shoes, etc)
Internet/cable - included in HOA fees ($700/quarter)
Water/sewer - $140/2 mo
Phone - $169 for 7 lines
Netflix - $13 (?)
Amazon prime - $120/yr
Walmart+ - $100/yr
Apple tv+ - $7
Movie theater - 2x$24/mo
Apple cloud storage - $2.99/mo (shared on 6 devices)
Vehicle registration - 3 x ~$72/yr
Gasoline - $50-100/mo (only 1 ICE vehicle remaining)
Car maintenance - ~$600/yr
Lawn care - $65/mo
Pest control - $28/mo
YMCA membership - $104/mo
Meanwhile certain other expenses are very high.
Insurances - $46k/yr
Tuitions - ~$110k/yr (this drops a bit in a year and a half, and then likely to zero in 6 years unless another kid chooses grad school at that point)
Kid 2 rent/etc - ~$30k/yr (this ends in a year and a half)
Kid 3 rent/etc - ~$15k/yr (this ends in a year)
Medical/dental care - ~$10k/yr
Ispouse pays our bills and knows our expenses but I do know that our real estate tax for our home has jumped from $3400 to $5000 in the last 3 years because of a buying spree in our neighborhood by people coming to Staunton from large metropolitan areas and paying exorbitant prices for relatively modest homes.
One nice thing about my state (and a few others, like CA) is the homestead (or similar) laws limiting this effect.
“The Florida homestead exemption also caps the increase in the assessed value of the homestead equal to 3% or the annual Consumer Price Index (CPI), whichever is less. This cap is otherwise known as the Save Our Homes benefit.”
You all track things a lot more closely than we do. Our expense estimates, which include annual cash replacement cost savings for two cars over 10 years and maintenance on two homes as well as the expenses, is about $75K/year. One house has a 2% mortgage and we are earning over 4% on the payoff money in the bank. We recently double checked all that to see if the expenses meet up with the projections and they are below target. This is pre-tax, as we have been doing Roth conversions and the taxes on that skew the budget higher, though I consider the taxes paid out of the taxable account for that purpose to be tantamount to putting more money into the Roth.
We are also still on retiree healthcare, though that changes when DH hits 65, making me scramble for 4 years until I too am Medicare eligible. We also still fully fund our 2 kids Roth IRAs fully each year, which we have done since they started working at 14. They take care of their 401Ks. We will do this as long as we can. But is that an expense? Happily no more college costs, and if they chose to go for grad school, the most we will do to help is to let them live at home.
We have always lived well below our means, with one of the benefits of being not even close to max expenditures being not having to track expenses very closely. We are both super frugal and contentedly so, though now with the loss of our fur baby we are travel eligible, and expect those expenses to ramp up significantly. Of course vet bills are now zero, which is no small amount for a 17 year old dealing with the impacts from long Covid.
One thing we chose to do differently is dental “insurance.” Our options were insanely expensive and our dental health pretty good, so we went with a Dental Discount and Insurance Plan: Dental Discount Plans & Other Ways to Get Affordable Dental Care Without Insurance DH, an engineer, ran the spreadsheets to compare this to our insurance options, and it was the clear winner. We are self insured for the less than probable potential dental issues.
I second Pop’s comments on property taxes here in VA. Over 10%/year increases for the 6 years we have lived here, but the increases in property values have been awesome. We sold one property last year and will sell our current residence next year, very much benefitting from the still increasing real estate prices with capital gains exclusion while lowering our $ and time commitment significantly.
So no nice table of expenses to compare, but a bit of anecdotal data to contribute.
I’m amazed you can live that cheaply in the Pacific Northwest. When we visit our daughter in Seattle, everything seems so expensive. I guess it might be a little cheaper on the peninsula. We’re still a little unsettled after moving to Northeast Ohio from Western Pennsylvania back in the fall, so hard to get a real clear picture on what our expenses will ultimately be. But, our total annual household expenses (everything included) will probably end up around $70-80k. We don’t track it down to the level of detail that you do. We now have a mortgage including HOA fees ($22k/year) and have been splurging on travel (avg $8k/year) a bit since retirement. Groceries and restaurants will run around $10k for the two of us. Gas is cheaper in Ohio and our two cars are paid for and cheap to maintain ($5k). Utilities - some up, some down working out close to a wash ($7k). Insurance is less on the new place and a big chunk of the property is covered by the HOA. Medical is variable, but looks like $5k or less in a typical year. That hits most of the biggest expenses.
@inparadise, I don’t know what retiree healthcare does for you. My experience may be helpful or irrelevant – I don’t know. Just giving a heads-up so you aren’t blindsided.
I am one year younger than DH. We were subsidized by the ACA as long as we were both using this since our joint income was below the cut-off.
When DH went on Medicare, our entire income was imputed to me alone by the ACA rules. This put me over the ACA income cut-off. I had to pay for health insurance out of pocket, which was $800 per month. I also had to repay $12,000 to the IRS for the ACA rebate that I assumed I would be eligible for. This was a nasty surprise.
I hope that won’t affect you. But be aware – because I wasn’t until it hit.
Wendy
We got to continue our employer’s group coverage, with a discount on the premium based on the number of years DH worked. It is a great deal. Because of the coverage we selected at retirement, Youngest had to be covered separately while a student, taking the cheap group coverage at school. This meant he had no choice other than to get a job with benefits when he graduated during Covid and professional jobs were scarce. Most of his friends were able to take advantage of the Gov’t allowing recent grads to take unemployment they had yet to pay into.
Yuk. Thanks for the heads up. We only pay about $850/month for the two of us right now!
We just assume I will have to pay full price. Happily, I am super healthy so a high deductible plan is likely what we will go for.
Definitely best to realize that you don’t know what you don’t know and put contingency plans in place. These situations are exactly why there is so much fluff in our numbers on the expense side and conservative numbers on the income estimates.
Wendy,
My wife and I live comfortably on ss alone, taken at 62. This basic budget does not include cars or vacations, which are either completely discretionary or with cars, we have some latitude as to the timing of replacement. Having said that, we are still withdrawing at about a 2% rate from our retirement funds. We try to get out of the Chicago area for at least 2 months in the winter, though this year it will only be one month. Hawaii is twice as expensive as the southeast for the winter, but still glad we came.We are also fortunate to be able to manage our income so a high deductible ACA plan is only $30 per month. This alone has saved us at least 100k in early retirement expenses. We are one year away from Medicare, when our healthcare costs and benefits will both go up.
Hello IP,
You may want to explore managing your income down to qualify for some ACA subsidy. For example, spending from any post tax funds or a Roth IRA will not count for income for the ACA. Bunching income into one year and subsidizing the next might work out for you, might not. Just something to consider.
Thanks Jim. It is a great idea to put out on the boards for others to consider. We have already looked at that and it won’t work for us. First world problem, not qualifying for subsidies.
