Understanding the Price of the American Dream in 2024

The Rising Cost of Living

The American dream, for many, is becoming increasingly elusive due to the escalating cost of living. Despite the wage growth spurred by the pandemic, it came after five decades of stagnant wage increases. Concurrently, housing prices have skyrocketed due to a limited supply of homes and a 55% drop in home construction compared to 2006. These economic forces have made it more challenging to get ahead, even with a competitive salary.

The Cost of the American Dream

A graphic by Dorothy Neufeld from Visual Capitalist demonstrates the estimated lifetime cost of the American dream per household, based on an analysis from Investopedia.

Breaking Down the $4.4 Million American Dream

As of 2024, the total cost of the American dream is a staggering $4.4 million—surpassing the average lifetime salaries of both men ($3.3 million) and women ($2.4 million) with a Bachelor’s degree. The most significant expense is securing a comfortable retirement, which requires $1.6 million in savings. This figure assumes a 4% annual withdrawal rate and an average inflation rate of 2.5% per year for 20 years of retirement. The decline in private pension schemes has made financial security in later years more challenging to achieve than in previous generations. Homeownership is the second-largest expense, with the cost of an existing single-family home standing at $930,000. With the surging cost of home prices, 77% of U.S. households cannot afford a median-priced home in 2024. Raising two children and sending them to college would cost $832,000 overall, as fertility rates in America reach historic lows. Today, 36% of Americans under 50 who don’t have children cite affordability concerns as a primary reason for not having kids. Furthermore, average college tuition costs have risen a staggering 748% since 1963, after adjusting for inflation. Wedding costs have also dramatically increased. Between 2019 and 2023, average costs rose by $4,000 due to inflationary pressures and pandemic backlogs. Today, the cost of a wedding, including the ceremony, reception, and engagement ring, exceeds $44,000.

Bottom Line

The American dream, once a beacon of hope and prosperity, has become a costly endeavor for many. With the rising costs of living, education, and housing, achieving this dream is becoming increasingly challenging. This situation raises questions about the sustainability of the American dream and the need for economic reforms. What are your thoughts on this matter? Do you think the American dream is still achievable? Share this article with your friends and discuss your views. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.