Recently, USA Today published a report estimating the American Dream now costs $130,000/year to attain. You can find the entire article and figures here: Price tag for the American dream: $130K a year
Based on these figures, only 1 out of 8 American families are living the dream. Yours truly would be excluded.
To compute the numbers, the author determined first to define the American Dream. Based on surveys and interviews, the American Dream became defined as “economic security, finding and pursuing a rewarding career, leading a healthy and personally fulfilling life, being able to retire in comfort, and opportunity for their children to live a better life.” All good things.
With this as the goal, the actual cost of the American Dream was parsed into several broad categories:
- The Essentials (housing, food, transportation, medical, utilities): $58,491
- Extras (vacation, entertainment, eating out, communications): $17,009
- Taxes/Savings (taxes, college savings, retirements): $54,857
Yearly income required for security, health, fulfillment, comfortable retirement, and opportunity for your offspring? $130,357
The article has continued to grow in popularity since its publication on Friday. It has been shared via social media thousands of times and has been reprinted in countless publications around the world: Detroit, Seattle, New Orleans, Great Britain, just to name a few.
This is unfortunate. Not only because the article is untrue, but because it is harmful.
For starters, consider the math. The notion that a family of four must own a $275K home, drive an SUV, spend $5K on summer vacation, and eat $315 worth of food every week is foolishness. The presumption that security and fulfillment and happiness can only be found in the ownership of these luxuries is a shameful misrepresentation of our heart’s greatest desires. I know countless people who live fulfilled and content lives on far less—all the while planning on a comfortable retirement and providing opportunity for their children.
Nevertheless, it is not the math that worries me so much and prompted this public response. Instead, it is the unintended (or maybe intended) consequence of this article. And my only hope is that these words will find their way into the minds of those who need to read them.
The bold proclamation that an annual income of $130K is required for the American Dream carries with it serious consequences:
It breeds discontent. 7 out of 8 American families are being told their lives would be more fulfilling if they had more money. As a result, our standards become redefined. While we may have been living a perfectly content life with far less annual income, we are forced to reconsider the possibility that we may be missing the really good life—and even worse, that we may never fully attain it.
It breeds jealousy and envy. 7 out of 8 American families are left out of the American Dream, left only to wish and dream it could be theirs. Soon, comparison begins to settle in our minds. The presence of bigger houses, faster cars, and corner offices become more apparent than ever before. And we begin to ask ourselves, “Why do they get to live the American Dream and not us?” Jealousy has taken root.
It breeds resentment. When jealousy and envy take hold of a heart, resentment is soon to follow. Not only do we wish we had what they had, but we soon become bitter towards those who have more. And whether we are in the 87.5% or the 99%, resentment will always steal more joy from us than it will from the other person.
The American Dream does not require $130K/year. To claim that it does, is to grow discontent, jealousy, and resentment in many American families. Indeed, this article harms us as individuals.
And it harms us as a nation because it is based on a faulty definition of the American Dream.
Every summer, we celebrate Independence Day in America. Towns and Cities all across our great Republic are united in their celebration: 250 years ago, our forefathers stood up against what they believed to be unfair laws and unfair taxation without representation.
These are the words they chose to boldly declare their independence on July 4th, 1776:
We hold these truths to be self-evident: that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness—that to secure these rights, Governments are instituted among Men.
This, then, is the American Dream. It always has been and must continue to be so: that each of us would be allowed to experience life, liberty, and the pursuit of happiness. And government would not stand in the way of these pursuits.
As Americans, we are free to pursue our own happiness—however we decide to define it—in whatever lawful manner we desire. And those of us who have chosen to define happiness and security apart from $250K mortgages and SUVs in the garage are free to do so. Because a happy life contains more important pursuits than material possessions.
This is the American Dream. And it costs far less than $130K/year.
John says
Regarding this quote from Joshua’a post:
“This, then, is the American Dream. It always has been and must continue to be so: that each of us would be allowed to experience life, liberty, and the pursuit of happiness. And government would not stand in the way of these pursuits.”
Unfortunately our government IS indeed standing in the way of these pursuits by, in my opinion, instituting policies that privilege and enhance the power of the moneyed interests of our society at the expense of the vast majority of our citizens.
Ed Helvey says
Amen and Amen, Joshua —
The American Dream was never about how much “stuff” and money you could accumulate – it was about OPPORTUNITY to live the life you wanted if you were willing to do what it would take to achieve that lifestyle. Unfortunately, the so-called American Dream described in the article is an aberration of the “Dream” and an entitlement mentality that has grown and festered in our society. Sure the rest of the world wants what we have, but they don’t realize it’s a trap and a poison apple. I’ve pretty much lived the American Dream all my life as a hard working, enterprising entrepereneur. There have been some seriously tough times, but they just made the good times that much sweeter. I call it “Living Free” because that’s really what the American Dream is about for me. Living life on your own terms, by your values and not being driven by what the Jones’s have or what “they” think as long as you don’t infringe on anyone else’s rights or negatively impact their lives. Being happy is an attitude and a choice. Too bad there are so many people who believe money and stuff buy happiness. Great writing Joshua, I hope a lot more young people like you start “living the REAL American Dream.” Cheers, Ed
Ni says
Joshua, Love your blog and this article in particular! My family is actually at this income level but you won’t know it from the house we live in or the car we drive. We underbuy material stuff and overspend on traveling on purpose, but it can be hard since our kids sometimes wonder why we don’t have a pool or this and that:-) Being immigrants to this country, we seldom feel the need to keep up with the Jones, we are happy with what we got. The only exception we take is we spend more on food since we are what we eat after all.
Rob says
But what do you pay for rent/mortgage and healthcare? That, not keeping up with the Jones is what is killing the american middle class.
Marie says
I agree it is harmful because it says the average family cannot achieve this consumerist version of the American Dream. I also have a problem with how USA Today went about it. They did not look for families who are living the dream, flesh and blood models of how the dream may be achieved, but rather cobbled together an image of a frankenfamily made up of various organizations’ data and their own idea of what a family who has achieved the dream.
But looking for the ones who are living the dream is too hard and they’d probably not conform to consumerist expectations. The family living the dream might not even have a new gas gobbling SUV, or a new house, or eat out, have cable or do and have all those shiny things.
Mary Carr says
I’m a fan, but I disagree with this post.
My husband and I have three children and we do our best to live a minimalist lifestyle. Our home is not large. Our three boys share a bedroom. Our cars are paid off. We consistently pare down possessions and seek to borrow, swap or buy used as an alternative to buying new. Vacations usually involve camping and gifts usually involved experiences (music lessons, ski passes, etc.).
While anyone can live on less than $130K a year, I contend that living your dream on less than $130K a year can be difficult for many, especially families – and that DOESN’T necessarily mean that they’re taking extravagant vacations and loading their home up with unnecessary possessions and over-scheduling their kids with expensive activities.
In Denver, Colorado, housing is expensive. Even modest, fixer-upper housing. Health care is expensive. Child care and elder care is expensive. If you’re not thrilled with public education, private school is expensive. If your city doesn’t have many public transportation options, owning vehicles is expensive. Baseball during the summer and music lessons during the school year are expensive. My husband and I put ourselves through school to do what we want to do professionally – student loans are expensive.
To allege that the American Dream isn’t really expensive, that the flaw lies with the people who are trying to live it, is an injustice to all of us. It shifts the conversation away from the skyrocketing costs of a college education and the sky-high cost of housing and the insane costs of health insurance and health care and what taxpayers are getting for their dollar in public education for their children.
We are by no means powerless. Indeed, my husband and I are inspired to find ways to live for less. But do not judge, do not make assumptions about people who need $130K or more to live their dream. I think that’s a very realistic estimate for many. If you are blessed with inexpensive housing, healthy parents, kids old enough to take care of themselves, great public schools, adequate health care, and ample public transportation options, then you are very lucky. You are also a small percentage of the population.
Let’s be honest here – the rising costs of even the essentials for a family in this country should be a major concern for all of us. Let’s not scoff and simplify the complexities of this very real problem by chalking it up to people overindulging in mega-mansions, Humvees and shopping sprees.
Marianna says
I very much agree with Mary’s post (above). Yes, we all have room to improve and it’s important to find happiness in experiences reject consumerism, and be responsible with money, but let’s face it… The average American is being run to the ground, and it has nothing to do with not being frugal enough or having too many possessions. It has a lot to do with greedy politicians and corporations getting rich off of our backs, while making us think that maybe if we work harder and get rid of that TV and other things we don’t really need (like the fridge or the AC in the home–both have actually been portrayed as excessive things in middle class homes), then things won’t be so bad for us. This is exactly the kind of mindset they want you to have that keeps the masses busy, quiet, and working harder than ever.
Marianna says
$100K is not a lot of money where I live (northern VA near Washington DC). Here, $400K will NOT buy you a single family home unless you’re willing to commute to work 50 miles or more one way. If you happen to work in the city and live 20 miles away in the suburbs, be ready to pay $20/day in highway tolls ($400/month) to get to and from work, or suffer in traffic for several hours each day. Health insurance is ridiculously expensive. In the last 5 years, my family’s health insurance premiums have gone up from $500/month (for a family of 4) to $1000/month for the same plan, yet our income has not gone up more than a tiny amount–not enough to make up for utilities and prices of everything else going up.
Real estate taxes are $5K for an average-sized townhouse. For $275K, you could get a condo, but then it would also be necessary to pay $400 in mandatory condo fees each month. After school care for 2 kids is $300/week. All day childcare is $1200/month for 1 child for an in-home daycare option (someone who runs the business out of their home). Daycare centers cost even more, so many young moms in our area stay home with their children for obvious reasons. If you want your preschooler to go to a church-based preschool (cheapest option available) 2 mornings a week (less than 6 hrs/week total), that would be $230/month. A simple HVAC repair (emphasis on simple) is never less than $400. If your dog/cat gets sick, a visit to the vet with basic bloodwork for your pet is $300. Okay, you get the point…
I would say even with being frugal and budgeting carefully (used cars, buying/selling on Craigslist & Ebay, cooking at home, inexpensive vacations, modest townhome), saving a little for retirement, and setting aside a small fund for emergencies, it would be difficult to have more than a tiny college fund for your children or any other investments other than a basic 401K. Many Americans in this situation consider moving, but when you have a family to support, it’s not an easy change and most decide to stay where the jobs are. Besides, we can’t all move to the more rural areas–they can’t hold us all and the jobs are just not there.
So I say the American Dream costs way more than $130K where I live. If the dream includes being able to deal with a major health crisis (like cancer) and sending your kids to college, then it costs significantly more than that. In the last 15 years the average tution cost for a 4-year college seems to have gone from around $15K to $30K per year, not including room and board. Ivy League schools went up in cost from $30K to $50K and higher. When will the higher education bubble burst? At this point, when the time comes for my kids to go to college, I don’t think they will be going to a 4-year school. This is not the end of the world, of course, but still a sad reality for many of us.
Thera says
I completely agree, however, this is not just “the American Dream”, it is also prevalent here in Canada, so I would change it to “the North American Dream” or even “the Western Dream”
J.Lee says
I understand what you’re saying, that $130k spent as such is not requisite for happiness but the phrase “the American dream” has come to mean, quite commercially, a family standard of upper middle class. The article was an analysis of culture and inflation with respect to this idea. It is not a definitive guide for contentment. If such articles are deemed detrimental and triggers for the potentially sensitive and insecure, then perhaps all bloggers and online authors should prepare disclaimers.
Liz V. says
I have to disagree with you, as someone who makes approximately $130K. It sounds like a lot of money, but we paid $19K in taxes alone last year, not including property taxes. We live in a starter house, in a starter neighborhood filled with young families and retired people that we purchased for $286K. We have a 15 year mortgage so that we can pay it off sooner, but it costs more to rent a 3 bedroom apartment (or any home that will fit our family) in our area than to pay our mortgage. We do not live in a fancy area. We live in a suburb in which schools pack kids into classrooms at over 30 students per teacher. Until last week we owned one car, a 1998, which we shared because we didn’t want a car payment. Last week we bought a 2006 used car for a good price that we can pay off quickly. We don’t have fancy furniture. I don’t buy my kids all the latest clothes. We do like to travel (which was our trade off for an expensive car). Yes, we definitely have enough. It does feel like we are living the dream. But we are not being ridiculous. Perhaps in some areas, it costs a lot less, but in ours, I don’t think so.
Mary Carr says
Right there with you!
Gerald Gnoza says
Oh, are you the Starter Family? I think you guys live across the street from us. Always making yogurt and sourdough? I smell ya on that one. You’ll rise to the top eventually. For now, good to maintain Beginner’s Mind, tho.
Sarah m says
Excellent response. I agree wholeheartedly.
Sarah M
Jamie says
Wonderful perspective–I couldn’t agree more!