Lifestyle Creep

AAA

DEFINITION of 'Lifestyle Creep '

A situation where people's lifestyle or standard of living improves as their discretionary income rises either through an increase in income or decrease in costs. As lifestyle creep occurs, and more money is spent on lifestyle, former luxuries are now considered necessities.

INVESTOPEDIA EXPLAINS 'Lifestyle Creep '

Lifestyle creep is particularly a problem to those individuals approaching retirement. People, five to ten years before retirement are typically in their peak earning years, but at the same time many of their earlier expenses, such as paying off a mortgage, or raising a family have been reduced dramatically. Faced with a surplus of cash, some people use it to buy more expensive cars, more expensive vacations or possibly a second home.

Since the goal in retirement is to maintain the lifestyle enjoyed in the last few years before retirement, these retirees require more funds to support their new, more lavish lifestyles. Unfortunately, they don't have the resources to do this because they spent their surplus cash flow.

RELATED TERMS
  1. Blue Collar

    A working-class person historically defined by hourly rates of ...
  2. White Collar

    A working class that is known for earning high average salaries ...
  3. Household Income

    The combined gross income of all the members of a household who ...
  4. Breadwinner

    The primary, or sole, income earner in a household. Breadwinners, ...
  5. Structural Unemployment

    A longer-lasting form of unemployment caused by fundamental shifts ...
  6. Happiness Economics

    The formal academic study of the relationship between individual ...
Related Articles
  1. How Much Debt Can You Handle?
    Budgeting

    How Much Debt Can You Handle?

  2. Two Roads: Debt Or Financial Independence?
    Retirement

    Two Roads: Debt Or Financial Independence?

  3. Digging Out Of Personal Debt
    Credit & Loans

    Digging Out Of Personal Debt

  4. It Is Better To Give AND Receive
    Budgeting

    It Is Better To Give AND Receive

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center