23 Sep 2016 It’s all relative
Posted at 11:33h in The Friday Brief[caption id="attachment_8098" align="alignleft" width="550"] Source: “What Do Data on Millions of U.S. Workers Reveal about Life-Cycle Earnings Risk?” by Guvenen, Karahan, Ozkan & Song[/caption] If you've been reading our Brief for any length of time you may have seen the term "lifestyle creep" come up once or twice. It's a fascinating concept with an equally emotive name, and it has all sorts of implications in the practice of long-term financial planning. Lifestyle creep is, more or less, the natural but potentially dangerous rising standard of living that occurs over the course of a lifetime as salaries increase with age (to a point). It's potentially dangerous, because if it creeps too much, then retirement becomes prohibitively expensive to fund at the level of your creeped up lifestyle, since your rate of consuming dollars will by definition have outstripped your rate of saving dollars.