The American Dream is deeply rooted in the Declaration of Independence, which proclaims that “all men are created equal” with the right to “life, liberty and the pursuit of happiness.” For hundred of years, the American Dream has encouraged millions of people across the world to come to America in search of better lives
According to a new Pew Research Center survey, the American Dream is back. 82 percent believe their either achieved the dream or are on their way. Specifically, Pew found that 36 percent believe they’ve achieved the American Dream and 46 percent believe that they are “on their way to achieving” it.
But what does the American Dream mean to you? For some, the American Dream entails a nice home in a safe neighborhood, a decent car, a full health care coverage, one summer vacation, a full contribution to retirement plan, and a regular contribution to kids’ education funds.
No idea is more central to Americans’ outlook than the American Dream — the belief that with hard work and the freedom to pursue your destiny you can achieve success and provide better opportunities for your children. Let’s see what it costs to live the American Dream.
How Much Does It Cost To Live The American Dream?
So what does it cost to live the American Dream in 2017? The price tag for the American Dream comes out to be around $135,000 a year.
Using USA Today’s method, the costs of the standard American Dream was chosen to be representative of a family of four. A mortgage and car payment represented larger costs, while utilities, food and water represented basic monthly costs. The extravagances, if they can be called that, include four relatively inexpensive family meals at a restaurant each month, along with one family movie and one date night for parents.
1. The Essentials
| Median Housing Expenses: | $17,334 |
| Groceries: | $12,570 |
| Car Expenses: | $11,451 |
| Medical Expenses: | $11,033 |
| Education Expenses (For 2 Children): | $4,000 |
| Apparel: | $2,631 |
| Utilities (Gas & Electric): | $1,956 |
| Essentials Subtotal: | $60,975 |
2. Extras
| Family Summer Vacation: | $4,580 |
| Entertainment: | $3,667 |
| Restaurants: | $3,662 |
| Cable, Internet, Cell Phone: | $3,100 |
| Miscellaneous Costs: | $2,000 |
| Extra Subtotal: | $17,009 |
3. Taxes and Savings
| Total Taxes (Federal, State, Local): | $34,156 |
| College Savings (For 2 Children): | $5,000 |
| 401(k) Maximum Contribution: | $18,000 |
| Taxes/Savings Subtotal: | $57,156 |
4. Total Income Needed
| Total Income Needed to Live The American Dream: | $135,140 |
- Home ownership is the basis to the American dream. To calculate the housing expenses, median sales prices of new homes sold in United States ($315,500) was used. The annual maintenance cost of 1% of the purchase price is also included in the calculation. After subtracting a 10% down payment and factoring the annual cost of a 30-year mortgage at 4% interest, the total for housing expenses is $17,334.
- The U.S. Department of Agriculture’s February 2017 figure of $12,570 for a moderate-cost grocery plan for a family of four was used to calculate the cost for groceries.
- In the latest report, AAA estimated it would cost $11,451 a year to own one four-wheel-drive sport-utility vehicle.
- Using the Milliman Medical Index, the employee’s total cost for health insurance premiums and out-of-pocket medical expenses is $11,033.
- Using Tax Calculator, total estimated tax burden including Federal, State, Local, FICA, Sales Tax, Fuel Tax and Property Tax is $34,15.
- The maximum annual pretax contribution to a retirement plan for people under 50 is $18,000. The contribution rate is slightly less than 15% of the American Dream household’s annual earnings, in line with financial planners’ recommendations.
Adding all the costs, total income needed to live the American Dream in 2017 is $135,140.