How Much Does the American Dream Cost?

What you'll learn:

➤ How Much Does the American Dream Cost?

Ever wondered about the price tag on the classic American Dream? Turns out, it’s now ringing in at a hefty $3.4 million. Yeah, that’s a jaw-dropping figure!

Cost of the American Dream (Investopedia)

So, what’s in this pricey American dream package?

Well, brace yourself. It covers the whole shebang—marriage, kids (two of ’em), a house that feels like home, healthcare, cars to cruise around in, and a top-notch education.

Let’s zoom in on a couple of eye-opening stats. Just raising two kiddos till they’re 18? That’ll set you back over half a million dollars. Yep, parenting comes with a significant price tag.

And that dreamy house with a white picket fence?

The average lifetime cost, including a mortgage with a 10% down payment and a 30-year fixed rate of 7.2%, hits close to $800k. Whoa, that’s a pretty penny!

All these figures might sound staggering, and rightly so. They paint a picture of the modern American Dream—glorious, yes, but also quite the investment.

So, while chasing this dream, it might be worth knowing what it really costs in today’s world.

➤ What is the American dream?

You know that classic “American Dream”? Well, it’s often pictured with a wedding, a couple of kiddos, and those golden college years. But let’s talk numbers for a sec.

Milestone	Cost	Description
Hospital Birth	$5,708	Average out-of-pocket costs for those enrolled in large group plans ($16,011 covered by insurance). Total shown for 2 children. (2018-2020, Peterson-KFF)
Raising Children to 18	$576,896	Average cost of raising a child until age 18. Total shown for 2 children. (2015 USDA, adjusted for inflation to 2022)
Car Purchases	$271,330	Average purchase price for used car. Total shown for 10 purchases (6-year old used car, lasting around 6 years each) over a lifetime (driving ages 16-80). (2023, iSeeCars.com)
College	$42,070	Average cost of an in-state 4-year institution including room and board. Total shown for 2 children. (2020-21, National Center for Education Statistics)
Wedding	$35,800	Average cost of a wedding and engagement ring (2022, TheKnot.com)
Home	$796,998	Average purchase price for a home, with lifetime mortgage costs. Mortgage assumes 10% down payment, 30-year fixed loan at 7.2% interest. (September 2023 purchase price and rates, Zillow, CFPB, St. Louis Fed) Does not include other costs including taxes, origination and lender charges, etc.
Pets	$67,935	Midpoint cost of lifetime care (15 years) for a dog and cat. (2022, Synchrony)
Health Insurance	$934,752	Average family premium costs. Total showing 39 years of current annual costs (ages 26-65). (2018-2020, Peterson-KFF)
Retirement	$715,968	80% of 2022 median household income. Total showing 12 years (average life expectancy past 65). (2022, U.S. Census, CDC)
Funeral Costs	$7,848	Average costs of a funeral with a viewing and burial (2023, PolicyGenius)

Wedding

For those going down the marriage lane, the average cost of saying “I do” and getting that oh-so-precious engagement ring hits around $35,800 as of 2022, according to The Knot.

And here’s where things get real pricey—starting a family isn’t all rainbows and butterflies. Those hospital bills for welcoming two little munchkins into the world?

They’ll put you out an average of $5,708 out-of-pocket per child, if you’re covered under a big health plan.

Kids

But hold onto your hats! Raising those two bundles of joy until they hit 18? Brace yourself—it’s clocking in at over half a million bucks. Yep, you read that right!

College

And let’s not forget the golden ticket to the future—college.

If your kiddos have their sights set on higher education, expect to shell out an average of $42,070 for each kid, including their room and board, at a four-year in-state school.

Pets

Now, if your family’s got a furry addition in the form of a dog or cat, get ready for some costs there too. Over a 15-year lifespan for each pet, you could be looking at a cool $67k in lifetime care.

Home

Let’s talk about two big-ticket items in the American Dream playbook—owning a home and having wheels.

Now, homeownership, that’s been a cornerstone of the American Dream for ages. But here’s the scoop—mortgage rates have been sky-high lately, hitting a whopping 7.79% in October 2023.

With these rates shooting up, home sales took a nosedive, hitting a 13-year low.

Why?

Well, those towering mortgage rates made the dream of owning a home seem like a distant reality for many hopeful buyers.

When you crunch the numbers, the average lifetime cost of owning a home, including a mortgage with a 10% down payment and a 30-year fixed rate of 7.2%, shakes out to around $796,998. That’s a hefty price tag, no doubt about it.

Cars

Now, let’s rev up to cars. Over a lifetime, if you’re looking at buying wheels for yourself and your crew, get ready to shell out roughly $271,330 for 10 car purchases.

Picture this—six-year-old used cars bought every six years from age 16 to 80. It’s a real investment on the road!

Retirement

And hey, retirement—it’s that golden phase we all aim for, right? Experts recommend aiming for about $715,968 saved up if you plan on living off 80% of your pre-retirement annual income.

Seems like a mountain to climb?

Don’t worry, we’ve got your back with retirement investment guides. It’s never too late to start securing your golden years!

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