The American Dream comes at a price.

A recent report from Investopedia reveals that achieving typical American aspirations—like owning a home, driving new cars, raising children, and taking regular vacations—will cost roughly $4.4 million over a lifetime.

This amount exceeds the average lifetime earnings of many Americans.

However, there is hope. Financial experts emphasize that the American Dream is within reach, especially for dual-income families with strong saving habits.

The concept of the American Dream has been a hot topic lately, with politicians referencing it at public events. For instance, Donald Trump pledged to revive the American Dream at the Republican National Convention, and both JD Vance and Kamala Harris mentioned it during significant debates.

Investopedia’s September analysis focused on the cumulative costs associated with classic American aspirations, such as homeownership, parenthood, extravagant weddings, vehicles, vacations, and pet ownership, concluding with a comfortable retirement and dignified funeral expenses.

Breaking Down the American Dream Expenses

Here’s a detailed look at the costs involved. We’ll provide more insights on the calculations below.

• Retirement: $1.6 million
• Homeownership: $930,000
• Raising two children: $832,000
• Owning new cars: $811,000
• Annual vacations: $179,000
• Wedding expenses: $44,000
• Pet ownership: $37,000
• Funeral costs: $8,000

Investopedia has previously assessed the financial aspects of the American Dream, driven by substantial reader interest.

“We initiated this analysis because American Dream-related searches have been among the top inquiries on our site,” explained Caleb Silver, Investopedia’s editor-in-chief.

A prior report on the American Dream, published in 2023, estimated lifetime costs at $3.4 million. However, Silver advises against direct comparisons to the new figures.

Exploring Wants Versus Needs

The 2023 report focused primarily on essential needs such as housing, transportation, health insurance, and retirement savings.

In contrast, the current report emphasizes desires: not just owning any car, but wanting a brand-new one; not merely wanting retirement, but seeking a comfortable future; including plans for vacations, children, and pets.

Readers can utilize the findings to formulate their own roadmap for pursuing the American Dream, according to Silver. You might not be interested in vacations, or perhaps you have allergies to pets. You can curate your own list of wants and determine your personalized cost for the American Dream.

“Some individuals might choose to forgo having children, while others may not aspire to purchase a new car. Everyone’s dream has a different price tag based on personal preferences,” Silver noted.

It’s unlikely that most people have $4.4 million readily available. In fact, data shows the median net worth for the top 10% of American households is around $3.8 million, according to the federal Survey of Consumer Finances from 2022.

Realizing the American Dream often requires extensive effort. On average, an American with a bachelor’s degree earns approximately $2.8 million over their lifetime, according to Investopedia. With two incomes, reaching the $4.4 million mark is quite feasible.

This American Dream report could encourage some to seek a life partner, as financial advisors suggest it should motivate individuals to save and invest wisely.

“The primary takeaway from this report is the critical need for a thorough financial plan,” highlighted Niv Persaud, a certified financial planner based in Atlanta. “However, the figures may also dishearten those who read them.”

Is $1.6 Million in Retirement Savings Achievable?

Some estimates in the Investopedia report may appear intimidatingly high. For instance, very few households manage to save anywhere near $1.6 million for retirement.

Nevertheless, not every aspect of the American Dream is as costly as anticipated.

Take homeownership, for example: While the total mortgage payment over 30 years might approach $1 million, once it’s paid off, “you could possess an asset valued at a million dollars,” explained Laura Mattia, a certified financial planner in Sarasota, Florida.

Now, let’s delve into the calculations underpinning the Investopedia report.

Retirement: $1.6 Million

Investopedia indicates that $1.6 million is the “recommended minimum savings” for a two-decade retirement period, reflecting median income levels for households reaching retirement age.

If this figure seems excessive, consider that financial experts usually advise retirees to withdraw only 4% of their savings each year for living expenses. Thus, 4% of $1.6 million equates to a relatively manageable $64,000 per year.

Homeownership: $930,000

This number reflects the typical expenses associated with purchasing a home and financing it via a 30-year fixed-rate mortgage,

This includes expenses such as insurance and property taxes.

The average home price in the United States is slightly over $400,000. The remaining part of the total $930,000 is made up of 30 years’ worth of interest, insurance, and taxes.

Cost of Raising Two Kids: $832,000

This figure encompasses all expenses related to raising two children until they reach 17 years old, as well as funding their four years at a public college in-state.

The cost to raise two kids until age 17 is around $612,000, according to estimates by Investopedia. When factoring in college costs, this total surpasses $800,000.

These financial burdens contribute to the decreasing number of Americans opting to have children.

Owning New Cars: $811,000

Car prices have skyrocketed since the pandemic began, making the acquisition of a new vehicle seem more like a luxury.

The $811,000 estimate represents the lifetime cost of making monthly payments on two new cars from ages 29 to 75, as stated by Investopedia. This analysis focuses on new models to capture the dream of always driving a new car, despite the pricey monthly payments.

However, fewer Americans seem to share this dream. The average age of a vehicle in the U.S. is nearly 13 years, which is a record. Holding onto an older car may not represent the American Dream, but it is a financially savvy decision.

“Once you pay off your car, you can enjoy it without any cost,” said Lonnie Golden, an economist at Penn State University’s Abington campus. “People are making conscious decisions, thinking, ‘I don’t need a new car right now.’

Annual Vacations: $179,000

If pursuing the American Dream involves taking a vacation each year, brace yourself: the overall expenses for a lifetime of vacations come to around $179,000, per Investopedia.

This estimate may be conservative. For instance, a basic family trip to Disney World currently costs about $7,000, according to consumer reports.

Wedding Costs: $44,000

This total accounts for expenses related to rings, the ceremony, and the reception.

Pet Expenses: $37,000

Funeral Costs: $8,000

While you may not be responsible for your own funeral expenses, the report assumes you’d prefer not to leave that burden for your heirs.

(This article has been updated with additional information.)