During the Republican National Convention in July, Donald Trump promised to “revive the American Dream.” Later, at last week’s convention, Democratic candidate Kamala Harris recognized those Americans “who work hard (and) pursue their dreams.”

But what does dreaming big mean for our finances today?

YSL News has previously quantified the “dream” in financial terms, most recently in the spring. According to an analysis from GoBankingRates, achieving the American Dream now costs over $150,000 for a family of four, though this amount greatly varies based on geographical location.

American Dream Costs Across All States

A decade ago, YSL News made similar calculations, presenting a price that was not marked by luxury items or extravagant vacations. At that time, the estimated cost came to $130,908.

After navigating through three presidential administrations, a pandemic, and the highest inflation rates in over four decades, we revisited the price to see how much it has escalated.

The Rising Expense of the American Dream

The current American Dream is now 36% pricier, meaning it has jumped by an additional $47,000. On the brighter side, median household income has risen by 46%, as reported by the U.S. Census Bureau.

Unfortunately, about only 1 in 8 U.S. families had enough income to cover the cost of the American Dream a decade ago, and this ratio hasn’t changed remarkably since then, according to the Census Bureau.

Rising Inflation Hits Necessary Expenses Hard

A significant portion of the increased costs are attributed to essentials. We’ll delve into some of the main price drivers below.

Typical Household Assumptions

Does the vision of the American Dream still encompass a spouse and two children? That’s one of the assumptions we made a decade ago. We also presumed a household managing one vehicle, living in a median-priced home, and securing health insurance through an employer.

In the following sections, we’ve made further assumptions. We examined our writer’s projections as well as shifts in the consumer price index. Overall, prices in the U.S. have surged by 32% since we first published this story on July 4, 2014.

While not everything has inflated by a third, some of the price increases are striking, especially considering these figures are just a decade old.

Housing Costs Drive Major Expenses for Essentials

Housing expenses account for the largest segment of most budgets. They contribute nearly a quarter of the increased overall cost of the American Dream over the last ten years, translating to $25,104.

Home prices have hit record highs, and 30-year mortgage rates are approximately 2.5 percentage points higher than before. An increase of one percentage point to the mortgage rate can add around $300 to the monthly mortgage payment on the current median-priced home, as explained by Lawrence Yun, Chief Economist of the National Association of Realtors.

Rising Health Care and Food Expenses Add $5,500 Annually

It’s not surprising that medical costs have surged significantly. According to Milliman, health expenses have escalated by 32%, equating to $3,123 more for a family of four over the decade. In contrast, clothing costs have increased by less than 3%, based on the consumer price index from the Bureau of Labor Statistics (BLS).

Food prices have climbed nearly 36% since 2014, with the majority of this surge occurring from 2021 to 2023, creating added stress for many Americans. Nonetheless, the USDA moderate-cost grocery plan saw only a 19% rise. Perhaps shoppers have adjusted their grocery lists to manage costs?

Family Vacations and Dining Out Have Become More Costly Extras

The estimated costs for family vacations made by GoGo Charters might seem a bit lavish compared to 2014 figures, but getaway plans have become increasingly necessary as the expenses pile up.

While not overly extravagant, the price for a week-long vacation is now over 73% higher than it was a decade ago. Eating out has also shot up nearly 50%, according to the CPI’s food-away-from-home statistics.

Tax Burden Rises Along With Increased Spending

The Institute on Taxation and Economic Policy estimates that individuals within this income bracket will face a tax burden of 28.8% this year, which is about a percentage point lower than in 2014. However, as families require more income to cover their expenses, they will pay an additional $7,663 in taxes.

It’s important to remember that even at this level of income, this hypothetical family may still be falling short in saving for retirement and their children’s education:

◾ Maximize Retirement Contributions: It’s likely that both parents work to achieve an income around $180,000 annually. If they plan for the future, both should ideally contribute to a 401(k) or SEP IRA, potentially exceeding $200,000 with an extra $23,000 pre-tax contribution for a 401(k).

◾ Contribute to a 529 Plan: If we’re dreaming big, wouldn’t it be prudent to invest more into a 529 plan for their children’s education? The cost of public college tuition has escalated by 30%, as reported in the annual surveys by U.S. News and World Report.

Currently, pursuing a four-year degree costs around $50,000, not including accommodation and meals.

Nevertheless, the concept of the American Dream goes beyond just financial success. This was a theme that YSL News delved into earlier this year.

In that article, Charisse Jones made a notable observation: “Dreams are inherently hopeful; they don’t guarantee fulfillment. They gleam either far away or exist solely in our minds.”

“For some, not achieving multimillionaire status may feel like failure. Others, however, find contentment through a cozy home, a loving family, and a bit of savings.”