What You Need To Know About Retirement - "Lifestyle Creep"

There was this article on SIA pilots who are taking pay cuts amidst this crisis. A 50year old senior pilot was one of them featured. He used to earn $23,000/m on average but now only at $13,000/m.

The issue was his expenses which were published to be $19,000/m! It caused strong reactions on forums...

There is a theory on this that you must know and it is called LIFESTYLE CREEP

Lifestyle creep, what is it?

Lifestyle creep is something invisible and affects almost everyone. Just with different extent.

When more money is earned, more money gets spent.

Not every part of the pay increment is saved....

Why is this so?

In large ways, it is your expectations on what you want. Because you can afford it now...

When your peers are having a certain lifestyle, holiday, car, property, it inflates your expectations.

Expectation of luxury goods and discretionary spending becomes a right to have and NOT a choice/want.

Not judging others...

Back to the point on netizens judging the pilot who has spent $19,000/month. He owns properties with mortgage and has sent 2 children for overseas education.

To many, it is still a high achieving life. He got to a position to be able to spend that amount was comfortable before this pandemic.

And more importantly, we may never know the pressures he faced or the trade-offs he has made to get to this stage in life and career.

Plan for your retirement...

Assets owned can still be sold if he really is in financial difficulty. Hopefully he has some of them to tide him through and some methods to scale back on his lifestyle.

There are a few key parts to think through

1) Are your liabilities measured well against your assets?

2) Have you insured yourself sufficiently because retirement can also be forced due to poor health

3) Have you bought enough assets for your retirement because the time to save hard is NOW?

4) Are there ways now to look at your current assets and current expenses to get more money invested towards your retirement?

If you are keen for to get professional advice, drop me a message. We've established our link already here and getting in touch has never been easier.