The American Dream Now Costs $4.4 Million

The American Dream now costs $4.4 million—that’s the estimated lifetime household cost of common milestones, including getting married, raising two children, buying a home, having new cars, saving for retirement, going on yearly vacations, and more. 

Investopedia’s report on how much the American Dream would actually cost to achieve found that the total was over $1 million more than most individual Americans earn in a lifetime, though not out of line with what a dual-income household might earn.

The average Bachelor’s degree holder in the U.S. earns about $2.8 million during their career, with women earning $2.4 million and men earning $3.3 million, according to Georgetown University Center on Education and the Workforce’s analysis of the U.S. Census Bureau’s American Community Survey. When looking at the data by household, the average U.S. household of two earners holding Bachelor’s degrees has lifetime earnings of $5.6 million.

While this may seem like a more favorable comparison, the $4.4 million represents the cost of aspects associated with the American Dream, which is only part of the overall cost of living. Other important costs to consider would include food, healthcare, auto insurance and other baseline necessities that aren’t included in Investopedia’s American Dream calculation.

Additionally, structural factors such as the racial wealth gap and gender wage gap, along with the rising cost of living, have made elements of the American Dream increasingly unattainable for many. 

Here is a look at the estimated lifetime costs of each major milestone and purchase commonly associated with the American Dream compared to the reality for most Americans. 

Saving for Retirement: $1.6 Million 

Avg Age: 22 - 65

The dream is to start saving for retirement during your first job after college and to continue saving from the ages of 22 to 65, and to have approximately $1.6 million in retirement savings to withdraw 4% each year (adjusting for 2.5% annual inflation) for 20 years. 

The reality is that many Americans don't hold retirement accounts—and those who do have accounts don’t have $1.6 million in them. About 54% of American families hold retirement accounts, according to the most recent Survey of Consumer Finances from 2022. The average amount held in a retirement account by 55- to 64-year-olds is $185,000 in 2022 dollars, according to the survey. 

While expenditures can help define a savings target, many personal factors can affect retirement costs, especially healthcare needs. According to a recent study, the average monthly cost of an assisted living facility is $5,350 or $64,200 per year, while a private room at a nursing home is $116,800 annually.

Additionally, economic factors such as high inflation over the past few years have affected savings and increased debt levels, making U.S. adults less sure of their retirement savings. According to AARP’s Financial Security Trends survey from January 2024, about 33% of U.S. adults 30 and older who are regularly saving for retirement said they will not have enough money in retirement at the current rate they’re saving (up from 29% in January 2023). Specifically, the increase in those who said they would not have enough money when they retire came from adults 50 and over. 

According to the survey, adults with lower household incomes and single adults consistently express a lack of financial security, as they generally have much lower household incomes compared to those who are married. It is also harder for those with lower incomes to save for retirement or even emergencies, and they are more likely to be burdened by high levels of debt. 

Wedding: $44,300

Avg Age: 29

The American Dream typically includes marriage, and for those who do choose to get married, the average cost comes out to $44,300, including the ring, ceremony, and reception. 

Weddings have become more expensive over the past few years. With the pandemic causing labor shortages and inflation fueling costs, the price of wedding items such as florals has increased up to six times more than in 2019 and 2020, according to Brides. 

Raising Two Children: $832,172

Avg Age: 29 - 53

For those who choose to have children, the total cost of raising two children through the age of 17 for a middle-income, married couple is about $611,694. When adding in the cost of sending two children to a public, in-state, four-year college, the total cost of raising two children increases to a total of $832,172. 

More U.S. adults are choosing not to have children, with affordability being one of the main factors. A survey by the Pew Research Center found that over half (57%) of adults under 50 who were unlikely to ever have children say they simply didn’t want to, while 36% cited “Can’t/Couldn’t afford to raise a child” as the reason.

Owning a Home: $929,955

Avg Age: 35 - 65

Owning a home has long been one of the main aspects associated with the American Dream,  with the average age of first-time homebuyers in the U.S. currently at 35 years old. This means a 30-year mortgage would be paid off by age 65. However, the rising costs of homeownership have made it much harder for many Americans to buy a home at all, let alone pay it off.  

The average cost of buying and financing a home with a 30-year fixed-rate mortgage comes out to about $929,955. While this does include homeowner’s insurance and property taxes, it does not include other recurring costs such as maintenance, HOA fees and more. In 2023, home insurance rates rose anywhere between 10% and 23% in some states, further increasing the cost barriers to homeownership. 

The current homeownership rate in the U.S. is 65.6%, according to the Census Bureau. That’s down from 69.2% in 2004 but higher than the 63.9% homeownership rate a decade ago in 2014. 

Always Having New Cars (Two Adults): $811,440

Avg Age: 29 - 75

Since the early 20th century, cars and the automotive industry have been synonymous with American identity. As a result, we chose to include new cars in the calculation of the Cost of the American Dream.

The total cost of making monthly payments on two brand-new cars owned between the ages of 29 and 75 equals about $811,440. For our report, we chose a window for new car ownership beginning at 29 and ending at age 75, as less than 10% of the total driving population is 75 or older. We chose monthly payments on new cars to reflect the dream of always being behind the wheel of a new car, even if it is being financed. (Note: cost only includes the monthly payment cost for the cars but does not include other costs such as fuel, registration, insurance, and maintenance fees.) 

While most Americans have cars, most of them do not buy or lease new cars. New vehicle sales and leases made up around only 29.5% of all vehicle sales in 2019, according to the Bureau of Transportation Statistics (most recent data available). 

A Yearly Vacation: $179,109

Avg Age: 22 - 85

If part of your American Dream is to take a week-long vacation every year between the ages of 22 and 85, the lifetime cost of 63 vacations comes out to $179,109. In 2022, 73% of Americans took at least one trip, according to Statista. Full-time employees with paid time off benefits took around 17 days of PTO on average in 2018, eight of which were used on vacation travel, according to the U.S. Travel Association.

Owning a Dog and Cat: $36,626

Nearly two-thirds of Americans own a pet, including 35% who have more than one, according to Pew Research Center. If you’re looking to get a dog and a cat, the lifetime cost for one of each is approximately $36,626. The number is based on the average life expectancy for dogs (12.7 years) and cats (11.2 years), along with annual and one-time pet care costs associated with dogs and cats. Of course, annual pet care costs can fluctuate depending on the needs of every individual pet. 

Funeral: $8,453

While not typically considered part of an inheritance, we included the cost of a funeral in our calculation of the price of the American Dream to account for not leaving behind burial costs for your descendants to pay for on your behalf. The average cost of a funeral, inflation-adjusted to 2024 dollars, is $8,453, according to National Funeral Directors Association data.

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Methodology

The ‘Cost of the American Dream 2024’ aims to quantify, in current dollars, the costs of eight aspects of life chosen because they are historically or commonly associated with an ideal yet attainable life in the United States, specifically: home ownership; new car ownership; a wedding; raising children and providing them with a college education; leisure time including pets and vacations; and finally retirement and end-of-life expenses. While the cost of everyone’s ‘dream’ will differ, our calculation puts a price tag on these expenses across different life stages.

Objectives

Items were chosen to meet two criteria: 1) they must be associated with living in the United States, and 2) they must represent an aspiration or ‘dream’ that is discretionary and distinct from a ‘necessity’. Home ownership, for example, is an ‘ideal’, and an often financially advantageous way of fulfilling the need all people have for shelter. As a result, many costs associated with items in the ‘Cost of the American Dream 2024’ are not affordable to many Americans. We aim in the article to provide context where possible to demonstrate the affordability of each line item. 

Limitations

The aim of the piece is to quantify the cost of dreaming, rather than the cost of living.  As a result, the items chosen and costs associated with the ‘American Dream’ piece do not reflect the spending habits of most Americans nor the cost of living in the United States. Importantly, these items do not include basic necessities such as food and healthcare. Some basic necessities are becoming increasingly unaffordable for many Americans. The cost of food has recently put considerable strain on U.S. consumers (as of July 2024, the cost of food has increased 27% since 2019). Further, according to one recent analysis nearly 1 in 12 adults hold medical debt, and nearly half have been diagnosed with a chronic condition. Essential food and healthcare costs have been excluded from our analysis on the basis that they are insufficiently discretionary to meet the criteria of representing a ‘dream’. 

All costs associated with items in the Cost of the American Dream are calculated in 2024 dollars (often adjusted for inflation to the latest 12 months as of publication using the Consumer Price Index for all Urban Consumers). Many item totals represent costs summed over a ‘lifetime’ or time period associated with each item. As a result, the totals are hypothetical, as realistically costs would be both accrued and paid over a lifetime. For example, the average payment for a new car may vary significantly over 46 years (for reasons including but not limited to inflation), and these changes would meaningfully affect the final figure. 

Finally, the items chosen for the ‘American Dream’ may reflect aspects of life individuals may not choose for themselves, as well as exclude elements that may be important for others. For example, many individuals choose not to marry or have children, while others marry many times, have larger families, etc. Beyond family life, there are many choices individuals might make such as hobbies, donating money, or circumstances that prevent individuals from participating in the workforce, all of which carry financial implications. Our aim is not to provide a prescriptive view of the ‘American Dream’ but rather to use the concept as a starting point, and to provide each reader the information they need to consider how they might want to plan for their own financial future. 

Acknowledgements

Items included in the ‘Cost of the American Dream 2024’ were selected by Investopedia editors, including Editor-in-Chief Caleb Silver, as well as the Data Journalism and Communications teams. Data were collected and analyzed by Amanda Morelli. Special thanks to the Anti-Bias Review Board and Dr. Mackenzie Price for consultation and editorial guidance.

Data Collection & Analysis

Below is a description of how each estimate is calculated. 

New car ownership

Data Source: 

According to Experian’s State of the Automotive Finance Market Report (Q1 2024), the average monthly payment for a new car was $735 ($523 for a used car).

Transformation:

We are defining the dream as a new car per adult from the ages of 29 to 75. We chose 29 as a starting point to coincide with the average between the median age of first marriage for men (30.2) and women (28.4) (Current Population Survey, 2023), and chose 75 as the end point because it is the age after which the share of the total driving population falls below 10% (Federal Highway Administration, 2022). This yields a total of 46 years driving and paying for a new car, or 552 months. We then multiply the monthly payment value by 552 months and 2 for each driving adult in the household. 

Using the reported average interest rate (6.73%) and the average loan amount ($40,634) from the same Experian report, we estimate that these monthly payments would result from a 60- or 72-month agreement, which would amount to approximately 8 new cars driven per adult from the ages of 29-74.

Notably, this figure is only meant to represent the cost of the car itself, and does not include additional costs such as maintenance, insurance, or fuel. 

Latest cost for new car ownership is: $811,440

Home ownership

Data Source:

The National Association of Realtors publishes the average sale price for existing single family homes in the U.S. for each month. To arrive at a final sale price we take the mean of the most recent 12 months of data (latest June 2024) from the NAR for an average value of $403,246. For the same time period, we take the mean interest rate for a 30-year fixed mortgage for an average of 7.02%.

Transformation

To arrive at the final cost of the home ownership, we apply the mean mortgage rate to the mean sales price, and assume the following:

• 20% down-payment with fixed interest throughout the length of the 30-year mortgage
• Annual homeowner’s insurance premium: $1,522 (Freddie Mac, 2023)
• Property tax rate of 0.91% per year (Tax Foundation, 2022)

Notably, this does not include HOA fees or other costs such as home maintenance, and assumes a fixed mortgage rate throughout the life of the loan (though many homeowners may choose to refinance). 

Latest cost for home ownership: $929,955

Wedding

Data Source:

According to The Knot’s 2023 Real Weddings Study, the average cost of a wedding ceremony and reception (among those getting married for the first time) was $38,000, and the average cost of an engagement ring was $5,500.

Transformation:

We adjust the sum of the 2023 costs for inflation using the Consumer Price Index for all Urban Consumers to reflect the latest 12-month average as of publishing.

Latest cost for a wedding: $44,300

Raising & sending two children to college

Data Source: 

The USDA’s 2015 Expenditures on Children by Families report estimated that middle-income, married-couple parents of two children could expect to spend a total of $233,610 per child from birth to age 17 for major budgetary components. 

Transformation

We then multiply this number to reflect the costs of two children and adjust 2015 costs for inflation using the Consumer Price Index for all Urban Consumers to reflect the latest 12-month average as of publishing.

Data Source:

The National Center for Education Statistics reports the 2022-23 average total cost of attending a public, in-state, four-year college (including on-campus living) is $27,146 per year.

Transformation

We then multiply this number to reflect the costs of two children attending for 4 years each, and adjust 2023 costs for inflation using the Consumer Price Index for all Urban Consumers to reflect the latest 12-month average as of publishing.

Latest cost for raising and sending two children to college: $832,172

Vacation

Data Source:

Allianz Partners USA's annual Vacation Confidence Index for 2024 reports the average cost of a vacation (defined as a leisure trip lasting at least one week that is 100 miles or more from the respondent’s home) is $2,843 per vacationing household.

Transformation:

We multiply this cost by 63, which would represent an average of one vacation per year from the ages of 22-85.

Latest cost for an adult lifetime of yearly vacations: $179,109

Pets

The ASPCA reports costs associated with care for both dogs and cats for 2021. These costs include annual costs such as food, and one-time costs such as spay/neuter procedures. 

Transformation:

In order to calculate the lifetime costs for a dog and cat we multiply the annual costs ($1,391 for a dog, and $1,149 for a cat) by the respective average life spans for each pet, and add the initial/one-time costs. We then adjust 2021 costs for inflation using the Consumer Price Index for all Urban Consumers to reflect the latest 12-month average as of publishing.

Latest lifetime cost for a dog and cat: $36,626

Retirement

Data Source

The Bureau of Labor Statistics reports the 2022 income before taxes for consumer units as $60,359 where the age of the reference person is 65+. We use this figure as a proxy for desired annual income for each year of retirement. 

Transformation:

To calculate the overall savings target for retirement we first adjust 2022 income for inflation using the Consumer Price Index for all Urban Consumers to reflect the latest 12-month average as of publishing. We then apply the 4% rule (dividing annual spend by 4%) to determine how much a consumer unit might need to save in order to generate the necessary retirement income. 

Latest savings target for approximately 20 years of retirement: $1,599,995

Funeral Expenses

Data Source:

The National Funeral Directors Association reports the median cost of a funeral (including viewing and burial) as $8,300 for 2023.

Transformations:

We then adjust 2023 costs for inflation using the Consumer Price Index for all Urban Consumers to reflect the latest 12-month average as of publishing.

Latest cost of a funeral: $8,453