The American Dream now costs $3,455,305—that's the estimated lifetime cost of common milestones including marriage, two children, homes, healthcare, cars, and education. The American Dream was one of Investopedia's top searched terms of the year, and is typically used to refer to major aspirational events and purchases like buying a home and car, getting married, having kids, and economically prospering. But rising costs have made the typical "American Dream" out of reach for many. In fact, the average lifetime earnings of Americans across all education levels is approximately $2.3 million—that's over one million short of the estimated cost of the American Dream.

Weddings, Kids, and College Tuition

The phrase "American Dream" has typically included marriage and two kids, and for those who choose that path, the average cost of a wedding and engagement ring is about $35,800 as of 2022, according to The Knot.

And when it comes to starting a family, the price tag gets even heftier, from hospital bills to college tuition. A hospital birth will cost you an average of $5,708 out-of-pocket for two children, for those enrolled in a large group health plan. But that's just the beginning—the cost of raising two children to the age of 18 is now estimated at over half a million dollars ($576,896). If your kids are planning on going to college, the average tuition (including room and board) for sending two kids to an in-state school for one year will cost about $42,070.

Home and Car

Of course for many, owning a home is a major part of the American Dream. However, mortgage rates have been on the rise as the Federal Reserve has continued its campaign to cool inflation by raising its benchmark interest rate. In October 2023, mortgage rates hit 7.79%, the highest since 2000. Home sales fell to a 13-year low in the same month, thanks to high mortgage rates pricing many buyers out of the market.

The average lifetime cost of a home including a mortgage with a 10% down payment and a 30-year fixed rate of 7.2% is now about $796,998, according to Investopedia's analysis.

Further, the lifetime costs of buying cars for you and your family is estimated to run you about $271,330 for 10 purchases. That's for a six-year-old used car, purchased every six years of adulthood from the ages of 16 to 80.

Retirement

So you've worked hard all your life to raise your family and now you're looking to retire in your golden years? You're going to need at least $715,968 saved if you're planning on living off of 80% of your pre-retirement annual income, as experts recommend. If this total sounds impossible, check out our retirement investing guides to get started. It's never too late.

Methodology

The ‘Cost of the American Dream’ is estimated from costs associated with 10 aspects of life that individuals may need or choose for themselves. It is not a reflection of all costs associated with life in the United States today, and may include elements some may not choose for themselves, as well as exclude elements that may be necessary for some. Below is a description of how each cost estimate was sourced and/or calculated.

Cost of delivering two children from analysis of MarketScan data showing that average additional health spending associated with pregnancy, relative to women of the same age who do not give birth, among people with large employer coverage is $2,854. Note: for those without access to insurance coverage, the out-of-pocket costs would likely be higher.

Cost of health insurance from which reports the average premium for family coverage is $23,968 per year. Total estimate shown for family coverage per year between the ages 26 and 65 (totaling 39 years).

Cost of raising two children to 18 from 2015 report which provides estimates of the cost of raising children from birth through age 17 for major budgetary components. 2015 figures adjusted to 2022 estimates using CPI data from the Bureau of Labor Statistics. 

Car costs calculated from where the average age of a car purchased in 2023 is reported to be 6.1 years, while the average purchase price of a 6-year-old vehicle is $27,133. According to , the average duration of a car on the road is 12.5 years, meaning the average used car purchased in 2023 could be expected to last approximately 6 years. Total estimates shown for a used car purchase every 6 years between the driving ages of 16 to 80, estimating a total of 10 used car purchases in a lifetime; repairs and insurance not included.

Costs of a lifetime of pet care from which estimates the 15-year cost of a lifetime of care for pets (between $19,893 and $55,132 for a dog, and between $15,055  and $45,790 for a cat). Totals shown include the sum of the midpoint values for one dog and one cat.

Cost of college from the report. Totals shown for in-state tuition for one year, plus required fees, room and board at a public institution for 2 students.

Cost of a wedding and engagement ring from .

Cost of a home and mortgage calculated from of $346,653 for September, 2023, as well as lifetime interest costs assuming a 30-year fixed mortgage with 10% down payment and 7.2% interest rate (average 30-year fixed mortgage rate as of September according to the ). Note: this does not include costs such as taxes, origination and lender charges, etc. 

Cost of retirement calculated from estimates for real median household income for 2022. According to estimates, retirement savings target 80% of income per year.  Estimate shown accounts for 12 years of retirement income, at 80% of national median income ($74,580) based on average life expectancy past 64 (list 76.4 years for males and females).

Cost of a funeral with a viewing and burial from .

Correction—Dec. 6, 2023: This article has been corrected to state $42,070 is the cost for one year of tuition at an in-state school, including room and board, for two children.