Algosensey|Dream On: The American Dream now costs $4.4m over a lifetime

You can Algosenseylive the American Dream, but it will cost you. 

The lifetime tab for such aspirations as owning a home, driving new cars, raising kids and taking annual vacations comes to a cool $4.4 million, according to Investopedia, the financial media site.  

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 family with two earners and good saving habits. 

You've probably been hearing a lot lately about the American Dream. At the Republican National Convention this summer, Donald Trump pledged to "bring back the American Dream." JD Vance invoked the term six times at 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: Homeownership, parenthood, a fancy wedding, cars, vacations and pets, topped off with a comfortable retirement and dignified funeral. 

The American Dream: An itemized list

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

• Retirement: $1.6 million 
• Homeownership: $930,000 
• Raising two kids: $832,000 
• Owning new cars: $811,000 
• Annual vacations: $179,000 
• Wedding: $44,000 
• Pets: $37,000 
• Funeral: $8,000 

Investopedia has calculated the costs of the American Dream before, driven by reader interest.

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

An earlier American Dream report, released in 2023, put the lifetime tab at only $3.4 million. But Silver cautions readers not to compare that report to the new one.  

The American Dream: Wants vs. needs

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

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

Readers can leverage the report to write their own plan for achieving the American Dream, Silver said. Maybe you don’t like vacations. Maybe you’re allergic to pets. You can pick and choose items from the list, add and subtract, and calculate the cost of your own American Dream. 

“Some people don’t ever want to have children,” Silver said. “Some people don’t ever want to drive a new car. Everybody’s price tag is different, depending on who you are.” 

Not many of us have $4.4 million lying around. In fact, the top 10% of American households have a median net worth of about $3.8 million, according to the federal Survey of Consumer Finances for 2022.  

But attaining the American Dream is a life’s work. The average American with a bachelor’s degree earns about $2.8 million across a career, Investopedia reports. Add a second income, and you could easily reach $4.4 million. 

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

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

Who has $1.6m in retirement savings?

Some of the figures in the Investopedia report look dizzyingly high. Few households, for example, have anything close to $1.6 million in retirement savings.  

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

Consider the family home. Yes, you may spend almost $1 million over 30 years to repay the mortgage. But once it’s repaid, “you might have an asset worth a million dollars,” said Laura Mattia, a certified financial planner in Sarasota, Florida.  

Here, then, is the math behind the Investopedia report. 

Retirement: $1.6 million 

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

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

Homeownership: $930,000 

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

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

Raising two kids: $832,000 

This number covers all the costs of raising two children through age 17, then paying for each to attend a public college at in-state rates for four years.  

The total costs of raising two children to age 17 come out to about $612,000, Investopedia estimates. College expenses push the figure past $800,000. 

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

Owning new cars: $811,000 

Vehicle prices have soared since the start of the pandemic, to the point that a new car feels like a luxury.  

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

Fewer Americans seem to share that dream. The average U.S. vehicle is nearly 13 years old, a record high.  Holding onto an aging vehicle may not emblemize the American Dream. Yet, from an economic perspective, it's a wise move.

"When you pay off the car, then you're enjoying it for free," said Lonnie Golden, an economist at Penn State University's Abington campus. "People can make adjustments and say, 'I don't need a new car yet.'"

Annual vacations: $179,000 

If your American Dream includes an annual vacation, then face facts: A lifetime of vacations will cost you $179,000, Investopedia reports.  

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

Wedding: $44,000 

The cost includes the rings, ceremony and reception. 

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Pets: $37,000 

Nearly two-thirds of Americans own pets, Investopedia reports. The $37,000 figure is the rough lifetime cost of one dog and one cat.  

Funeral: $8,000 

You don’t have to pay for your own funeral. But the report presumes you would rather not pass on the tab to your heirs.  

(This story has been updated to add new information.)