Tuesday, December 29, 2015

Pre-Retirement Finances - 2015 results and 2016 expectations

How are you faring economically as you approach or manage retirement?

The year has almost ended and I've been looking at our 2015 expenses to plan for the coming year as our income will stay the same for the most part. I'm still delaying collecting social security so that it will increase as I am betting on a long life. My parents lived to 88 and 92 and I want to maximize those payments as an inflation hedge. I'll start collecting some time after DH stops working full time in 2017.

2015 expenses

- Our cars cost us 3.6% less than 2014. Insurance was up but gasoline and licenses were down.
- Clothing and haircuts were up 49.8% as I redid my wardrobe.
- Phones, cable and other communications up 3.6% mostly due to cable bundle increases.
- Contributions were down 14.36% and dog costs down 27.7% as she did not have any illnesses beyond her routine care.
- Groceries, alcohol, household supplies and toiletries were up 8.5%
- Gifts were down 24.3% as we made no large cash gifts in 2015.
- Health care costs and housing costs (maintenance, insurance and property taxes mostly) were up 27.4% and 24.7% respectively.
- We cancelled my life insurance so life and excess liability insurance costs went down 28.9%.
- Recreation costs were down 22.52% due to decreased travel costs.
- Taxes were up 14.8% as we paid more realistic estimated taxes after a year of refunds due to filing amended tax returns to correct our ignorance of state tax laws for those over 60.

So overall, our expenses went up 5.25% which is not sustainable given current returns on investments.


Expense expectations

Our health insurance cost has increased by 8.8% and our share of the cost of prescriptions and treatment has gone up as well. I am expecting our car insurance, homeowners insurance, life insurance and property taxes to increase in the 10% - 20% range each. I imagine Comcast will raise their rates as well.

What will go down? Car licenses. Gifts. Travel costs if we only go to California as we now have family guest rooms to use at both locations. My clothing costs as I am committed to buying fewer items. Books, hobbies, classes - all $0 as I plan no spending there.

I can try to reduce or maintain our spending on food but costs have been rising and healthy eating is important. Dog care, health related items, home repair, gasoline, etc. are all pretty much out of my control as they are necessary and I have to pay what they cost. We will likely start doing some pre-sale improvements as well although those may not start until 2017. We will make one major furnishings purchase of a new mattress and bedding. Research is necessary for that one!

I will continue to pay for Pilates sessions as a health investment. I want to take one vacation that is not a family visit so that will be added in. We haven't decided where it will be yet but probably in the US. We will keep going out to eat occasionally but have decreased that in the last couple of months as several of our favorite restaurants have closed.

Income expectations

My husband is federal employee and they are to get a 1% raise. He will get a yet to be determined bonus based on performance evaluation. The annuity payments I inherited from my parents will end after October's payment. Interest rates may go up slightly on our savings. I think this will be a wash.


  1. That is a great analysis and forecast. Will you have enough activities if you pay nothing for hobbies and classes?

  2. Yes as we have an entertainment budget line. Hobbies and classes were for things like art classes or other things like that which I just am not very interested in at the moment. If I change my mind I'll spend the money.


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