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. Breadwinner

    The primary, or sole, income earner in a household. Breadwinners, ...
  3. White Collar

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

    The combined gross income of all the members of a household who ...
  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 FAQS
  1. What caused the American Industrial Revolution?

    The initial vestiges of industrialization appeared in the United States in 1790, when Samuel Slater opened a British-style ... Read Full Answer >>
  2. Is industrialization good for the economy?

    Industrialization is the process by which an economy moves from primarily agrarian production to mass produced, technologically ... Read Full Answer >>
Related Articles
  1. Budgeting

    How Much Debt Can You Handle?

    Follow these five steps to manage debt without cutting up your credit cards.
  2. Retirement

    Two Roads: Debt Or Financial Independence?

    A higher income won't make you richer - unless you learn to live on less.
  3. Credit & Loans

    Digging Out Of Personal Debt

    Find out why good intentions can put consumers in an even bigger hole than before.
  4. Budgeting

    It Is Better To Give AND Receive

    You give to benefit others, but there can be perks for you too.
  5. Economics

    Understanding Structural Unemployment

    Structural unemployment is an economic miss-match where workers fail to find jobs and employers with available jobs fail to find workers.
  6. Personal Finance

    Can A Family Survive On The U.S. Minimum Wage?

    As the political debate roars on, the numbers are clear: Even two full-timers at U.S. minimum wage can't keep a family of four above the poverty line.
  7. Budgeting

    5 Ways To Stretch Your Retirement Budget

    Living comfortably can be easy if you follow a simple plan.
  8. Economics

    What The National Debt Means To You

    The U.S. deficit seems to grow every year. But how does it actually affect you?
  9. Economics

    The Gini Index: Measuring Income Distribution

    A country with $100 billion in assets and four residents sounds good - unless three of them have $0.
  10. Retirement

    Downsize Your Home To Downsize Expenses

    Learn how to cut your mortgage, tax, gas and utilities bills.

You May Also Like

Hot Definitions
  1. Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
  2. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  3. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  4. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  6. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
Trading Center