The American Dream now costs $4.4m
You can live the American Dream, but it will cost you.
A lifetime’s worth of hobbies like owning a house, driving new cars, raising kids and taking annual vacations adds up to a cool $4.4 million, according to Investopedia, a news site for finances.
That’s more than the average American earns in a lifetime.
But do not despair. The American dream is achievable, financial advisers say, especially for a family with two employees and good savings.
You’ve probably been hearing a lot lately about the American Dream. At the Republican National Convention this summer, Donald Trump pledged to “bring back the American Dream.” JD Vance has requested that term six times in the vice presidential debates. Kamala Harris said in the president’s final interview.
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For the September report, Investopedia set out to calculate the lifetime costs of America’s classic goals and desires: Home ownership, parenthood, luxury marriage, cars, vacations and pets, which got better. with a happy rest and a dignified burial.
The American Dream: An organized list
Here is the breakdown. We will explain the math below.
- Retirement: $1.6 million
- Ownership: $930,000
- Raising two children: $832,000
- New car ownership: $811,000
- Annual leave: $179,000
- Wedding: $44,000
- Pets: $37,000
- Funeral: $8,000
Investopedia has calculated the cost of the American Dream first, driven by reader interest.
“We started this exercise because the American Dream was one of the most searched terms on our website,” said Caleb Silver, editor-in-chief of Investopedia.
An earlier report on American Dream, released in 2023, set the lifetime tab at just $3.4 million. But Silver cautions readers not to compare that report with the new one.
The American Dream: Wants versus needs
That 2023 report focuses on the things we need: A house, a car, health insurance, retirement funds.
The new report focuses more on what we want: Not just a car, but a new car. Not just retirement, but relaxation. Holidays. Children. Pets.
Readers can use the report to write their own plan to achieve the American Dream, Silver said. Maybe you don’t like holidays. Maybe you are allergic to pets. You can pick and choose items from the list, add and subtract, and calculate the cost of your American Dream.
“Some people don’t want to have children,” Silver said. “Some people don’t want to drive a new car. Everyone’s price is different, depending on who you are.
Not many of us have $4.4 million lying around. In fact, the top 10% of American households have a net worth of $3.8 million, according to the Federal Survey of Consumer Finances for 2022.
But achieving the American Dream is a lifetime’s work. The average American with a bachelor’s degree earns about $2.8 million over the course of a career, Investopedia reports. Add the second amount, and you can easily reach $4.4 million.
Perhaps the American Dream report will encourage some readers to find a life partner. Indeed, financial advisors say, the document should motivate readers to save and invest.
“The key takeaway from this report is the importance of having a comprehensive financial plan,” said Niv Persaud, a certified financial planner in Atlanta. “The sad thing is that numbers can overwhelm and discourage people.”
Who has $1.6m in retirement savings?
Some of the numbers in the Investopedia report look incredibly high. For example, very few households have any of the $1.6 million in retirement savings.
But some parts of the American Dream may not cost as much as you think.
Think of a family home. Yes, you can use up to $1 million over 30 years to pay off the mortgage. But once it’s paid off, “you could have a million-dollar asset,” said Laura Mattia, a certified financial planner in Sarasota, Florida.
Here, are the numbers behind Investopedia’s report.
Retirement: $1.6 million
According to Investopedia, $1.6 million represents the “recommended minimum income” for 20 years of retirement, based on the median income of retirement-age households.
If the number seems high, consider that financial advisors often advise retirees to withdraw only 4 percent of their savings each year for living expenses. And 4% of $1.6 million is a modest $64,000 in comparison.
Ownership: $930,000
That number shows the average cost of buying a home and financing it with 30-year, fixed financing, including insurance and property taxes.
The median home price in America is north of $400,000. The remaining $930,000 comes from the 30-year interest, insurance and taxes.
Raising two children: $832,000
This number covers the entire cost of raising two children to age 17, then paying for each to attend community college at in-state tuition for four years.
The total cost of raising two children to the age of 17 comes out to about $612,000, Investopedia estimates. The cost of college pushes the previous figure to $800,000.
These costs explain why fewer Americans choose to have children.
New car ownership: $811,000
Car prices have soared since the start of the pandemic, that a new car feels like a luxury.
The $811,000 figure represents the total lifetime cost of monthly payments on two new cars from ages 29 to 75, Investopedia says. The report focuses on new cars “reflecting the dream of being behind the wheel of a new car,” even if it means paying a higher monthly premium.
Few Americans seem to share that dream. The average American car is about 13 years old, which is a record high. Being stuck in an old car may not represent the American Dream. However, from an economic point of view, it is a smart move.
“If you pay for a car, then you have free fun,” said Lonnie Golden, an economist at Penn State University’s Abington campus. “People can make changes and say, ‘I don’t need a new car yet.’
Annual leave: $179,000
If your American Dream includes an annual vacation, check out the facts: A vacation of a lifetime will cost you $179,000, Investopedia reports.
And that number sounds old. According to one consumer site, an average family trip to Disney World now runs you $7,000.
Wedding: $44,000
Cost includes rings, ceremony and reception.
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Pets: $37,000
About two-thirds of Americans own pets, Investopedia reports. $37,000 is a rough lifetime cost for one dog and one cat.
Funeral: $8,000
You do not need to pay for your funeral. But the report assumes you’d rather not pass the tab on to your heirs.
(This story has been updated to add new information.)
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