The American Dream now costs $4.4 million

You can live the American dream, but it will cost you.

According to Investopedia, the financial media site, lifetime spending on dreams like owning a home, driving new cars, raising children and taking annual vacations totals a whopping $4.4 million.

That’s more than the average American earns in a lifetime.

But don’t despair. The American dream is attainable, financial advisers say, especially for a two-earner family with good savings habits.

You’ve probably heard a lot about the American dream lately. At the Republican National Convention this summer, Donald Trump promised to “bring back the American dream.” JD Vance invoked the term six times during the vice presidential debate. Kamala Harris mentioned it in the last presidential debate.

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For a September report, Investopedia set out to calculate the lifetime costs of classic American goals and desires: home ownership, parenthood, a fancy wedding, cars, vacations and pets, topped off with a comfortable retirement and a dignified funeral.

The American Dream: A Detailed List

Here’s the breakdown. We explain the math below.

Retirement: $1.6 million
Homeownership: $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 previously calculated the cost of the American Dream based on reader interest.

“We started this exercise because the American dream was one of the most searched terms on our site,” said Caleb Silver, editor in chief of Investopedia.

A previous report from American Dream in 2023 put the lifetime span at just $3.4 million. However, Silver cautions readers not to compare this report with the new one.

The American Dream: Wants vs. Needs

This 2023 report focused on things we need: a home, a car, health insurance, retirement funds.

The new report focuses more on the things we want: Not just a car, but a new car. Not just a retirement, but a comfortable one. Vacation. Children. Pets.

“Readers can use the report to create their own plan for achieving the American dream,” Silver said. Maybe you don’t like vacations. Maybe you are allergic to pets. You can select items from the list, add and subtract, and calculate the cost of your own American dream.

“Some people never want to have children,” Silver said. “Some people never want to drive a new car. The price is different for everyone depending on who you are.”

Not many of us have $4.4 million in the bank. In fact, the top 10% of American households have a median net worth of about $3.8 million, according to the 2022 Federal Consumer Finance Survey.

But achieving the American dream is a life’s work. According to Investopedia, the average American with a bachelor’s degree earns about $2.8 million over the course of their career. Add a second income and you could easily reach $4.4 million.

Perhaps the American Dream Report will inspire some readers to find a life partner. Certainly, financial advisers say, the document is intended to encourage readers to save and invest.

“The key takeaway from this report is the importance of a comprehensive financial plan,” said Niv Persaud, a certified financial planner in Atlanta. “The downside is that the numbers can depress and discourage people.”

Who has $1.6 million in retirement savings?

Some of the numbers in the Investopedia report look dizzyingly high. For example, few households have retirement savings approaching $1.6 million.

But other components of the American dream may not cost as much as you think.

Consider the single-family home. Yes, you can spend almost $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.

So here is the math behind the Investopedia report.

Retirement: $1.6 million

According to Investopedia, $1.6 million represents the “minimum recommended savings” for 20 years of retirement, based on the average income of retirement-age households.

If the number seems high, keep in mind that financial advisors typically instruct retirees to withdraw only 4% of their living savings each year. And 4% of $1.6 million is a comparatively modest $64,000.

Homeownership: $930,000

This figure reflects the average cost of purchasing a home and financing it with a 30-year fixed-rate mortgage, including insurance and property taxes.

The average price of an American home is just over $400,000. The remainder of the $930,000 comes from 30 years’ worth of interest, insurance and taxes.

Raising two children: $832,000

This amount covers all the costs of raising two children up to the age of 17 and then pays for each child to attend a public university at state rates for four years.

The total cost of raising two children until age 17 is about $612,000, according to Investopedia estimates. Tuition expenses total over $800,000.

These costs partly explain why fewer Americans are choosing to have children.

New car ownership: $811,000

Vehicle prices have risen so much since the pandemic began that a new car feels like a luxury.

According to Investopedia, the $811,000 figure reflects the total lifetime cost of making monthly payments on two new cars from ages 29 to 75. The report focuses on new cars “to reflect the dream of always being behind the wheel of a new car,” even if that means high monthly payments.

Fewer Americans seem to share this dream. The average U.S. vehicle is nearly 13 years old, a record high. Holding on to an aging vehicle may not embody the American dream. However, from an economic perspective, it is a smart move.

“If you pay off the car, you can enjoy it for free,” said Lonnie Golden, an economist at Penn State University. “People can make adjustments and say, ‘I don’t need a new car yet.'”

Annual leave: $179,000

If your American dream includes an annual vacation, face the truth: A lifetime vacation will cost you $179,000, Investopedia reports.

And that number sounds conservative. According to one consumer site, a modest family trip to Disney World now costs $7,000.

Wedding: $44,000

The cost includes the rings, ceremony and reception.

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Pets: $37,000

According to Investopedia, nearly two-thirds of Americans own pets. The amount of $37,000 is the approximate cost of living for a dog and a cat.

Funeral: $8,000

You don’t have to pay for your funeral yourself. However, the report assumes that you would prefer not to pass the bill on to your heirs.

The American Dream: A Detailed List

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