Lifestyle inflation refers to when discretionary spending increases at roughly the same rate as your income.
An extreme example is what typically results after someone wins the lottery. However, more subtle increases are far more common and may even be hard to detect, or perhaps, just much easier to ignore. If you’re maxing out your 401(k), should you be concerned if there’s not much else left at the end of the year?
For high earners, the slow creep of lifestyle inflation can be a real threat to retirement.