Investopedia wanted to capture the exact dollar total an average American would spend to experience the elements of everyday life so many of us view as normal. Our team set out to define exactly why otherwise average-sounding accomplishments felt excruciatingly out of reach for millions, and quickly found out why. Using conservative spending estimates analyzed from publicly available data, our team found that the estimated cost of common milestones like a wedding, having two kids, buying a home, paying for healthcare, cars, and an education would cost $3.4 million over a lifetime.
The total cost of the American dream was estimated from costs associated with 10 lifetime milestones most often thought of as elements of "the American dream" using publicly available data sources, analyzed and adjusted for inflation and other factors by Investopedia's research and editorial team. It is not a reflection of all costs associated with life in the United States today, and may include elements individuals may not choose for themselves, as well as exclude elements that may be necessary for some. Below is a description of how each cost estimate was sourced and/or calculated.
Cost of delivering two children from Peterson-KFF’s 2018-2020 Health System Tracker analysis of MarketScan data showing that average additional health spending associated with pregnancy, relative to women of the same age who do not give birth, among people with large employer coverage is $2,854. Note: for those without access to insurance coverage, the out-of-pocket costs would likely be higher.
Cost of health insurance from KFF’s 2023 Employer Health Benefits Survey which reports the average premium for family coverage is $23,968 per year. Total estimate shown for family coverage per year between the ages 26 and 65 (totaling 39 years).
Cost of raising two children to 18 from USDA’s 2015 Expenditures on Children by Families 2015 report which provides estimates of the cost of raising children from birth through age 17 for major budgetary components. 2015 figures adjusted to 2022 estimates using CPI data from the Bureau of Labor Statistics.
Car costs calculated from iSeeCars’ 2023 Study where the average age of a car purchased in 2023 is reported to be 6.1 years, while the average purchase price of a 6-year-old vehicle is $27,133. According to S&P Global Mobility, the average duration of a car on the road is 12.5 years, meaning the average used car purchased in 2023 could be expected to last approximately 6 years. Total estimates shown for a used car purchase every 6 years between the driving ages of 16 to 80, estimating a total of 10 used car purchases in a lifetime; repairs and insurance not included.
Costs of a lifetime of pet care from Synchrony’s 2022 Lifetime of Care study which estimates the 15-year cost of a lifetime of care for pets (between $19,893 and $55,132 for a dog, and between $15,055 and $45,790 for a cat). Totals shown include the sum of the midpoint values for one dog and one cat.
Cost of college from the National Center for Education Statistics’ 2020-2021 report. Totals shown for in-state tuition for one year, plus required fees, room and board at a public institution for 2 students.
Cost of a wedding and engagement ring from The Knot 2022 Real Weddings Study.
Cost of a home and mortgage calculated from Zillow’s average home price estimate of $346,653 for September, 2023, as well as lifetime interest costs assuming a 30-year fixed mortgage with 10% down payment and 7.2% interest rate (average 30-year fixed mortgage rate as of September according to the St. Louis Fed). Note: this does not include costs such as taxes, origination and lender charges, etc.
Cost of retirement calculated from Census.gov estimates for real median household income for 2022. According to estimates, retirement savings target 80% of income per year. Estimate shown accounts for 12 years of retirement income, at 80% of national median income ($74,580) based on average life expectancy past 64 (2021 estimates from CDC list 76.4 years for males and females).
Cost of a funeral with a viewing and burial from PolicyGenius (2023).
As part of Investopedia's mission to make financial decisions simpler for all people, of all ages, and all incomes, we wanted to bring transparency to a major financial hurdle impacting individuals across the country. Since being published on December 5, 2023, Investopedia's "The American Dream Now Costs $3.4 Million" received:
Investopedia sought to put a number to the frustration so many Americans felt around achieving what has typically been considered normal. But after demonstrating that the estimated costs of living the American Dream would total over $1 million more than the average lifetime earnings of Americans across all education levels, it's no wonder so many feel left out. Our data story created a conversation about the price of living in the US that spread across TV, streaming, radio, online media, and social media. It's our hope that by highlighting the monetary challenges we all face, it's a step toward helping all Americans understand how to take control of their finances and grow toward a better future.
