It’s easy to fall victim to lifestyle inflation.
What is lifestyle inflation? It is the tendency to increase expenses as earning increases. If you get a raise of a few thousand dollars, you then increase your expenses by a similar amount.
Over time, you find something you like doing, for instance, going out for dinner more often, buying an expensive car, taking an expensive trip, etc. Your lifestyle can tend to go up a little bit. There's a general rule of economics that says expenses rise to meet income.
If you’re like many people, you might see that retirement is creeping up on you. If so, you may be wondering how you should set up your retirement income. Maybe you’ve talked about it with some friends and asked for their opinions, and read about it on the internet. Perhaps you’ve also spoken with a financial advisor.
In today’s turnkey world, there are myriad applications and app-based options online that purport to make it convenient and easy to manage your financial matters. Likewise, there are many of what I call “snake oil salesmen” who will happily create a financial plan for you in exchange for some of your hard-earned money. The problem is that neither of these options can really help you effectively plan for retirement. Sure, the former claim to make planning something you can easily accomplish and the latter often retrofit your objectives into a one-size-fits-all “canned” plan that’s sold to every client.