My wife and I make $215,000 a year — but now we struggle to make ends meet after buying our big ‘forever home.’ Is the American dream even possible?

Chasing the American dream

The “American dream” now costs an estimated $4.4 million, according to an analysis by Investopedia, based on the lifetime cost of car payments, a wedding, raising two children through college, owning a home, owning one dog and one cat, taking a yearly vacation, funding 20 years of retirement and paying in advance for their funerals.

This calculation doesn’t include additional expenses, such as food, gas, and healthcare, which can significantly bump up this lifetime total.

According to the U.S. Bureau of Labor Statistics’ Consumer Expenditures report, in 2022 the average annual expenditure by households for food was $9,343.

Healthcare expenses were $5,850, while gas and other vehicle expenses were $6,954. Add these up over a lifetime from ages 22 to 80, and that can add almost another $2 million to the total — and this doesn’t account for inflation.

The average bachelor’s degree holder in the U.S. earns a median of $2.8 million during their career.

Let’s say, using the example above, the hypothetical couple each have bachelor’s degrees, which would give them a combined lifetime income of $55.6 million — this still isn’t enough to cover the American dream when all other expenses are accounted for.

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Education could be the key to success

This also means that the American dream could be out of reach for many Americans.

Just under 38% of Americans have attained a bachelor’s degree or higher, according to the U.S. Census Bureau.

And, while there are many successful people who don’t have post-secondary education, a degree is still “the most reliable pathway to the middle class,” according to the Georgetown University Center on Education and the Workforce.

The Georgetown University Center also found that 74% of workers with college degrees have good jobs, compared with 42% of workers with no more than a high school diploma. It also estimates that the lifetime earnings gains is $495,000 for an associate degree, $1 million for a bachelor’s degree and $1.7 million for a graduate degree.

Still, there’s a pathway to achieving the American dream even for those earning less than $4.4 million over their lifetime.

Starting to save early and regularly can help build a retirement nest egg through compounding.

Upskilling, reskilling, or making a career pivot could help to increase your income. Or, consider options like buying a used car instead of a new one or relocating to a less expensive part of the country.

Even well-paid people are struggling to make ends meet these days. For the couple making $215,000, their dream home isn’t so dreamy after all, with mortgage payments stretching their budget thin (make a budget before you go house shopping and make sure your dream house fits within that budget).

But the American dream is still possible — it just takes some planning, money management, and hard work.

If you’re feeling overwhelmed, it may also make sense to bring in a financial adviser who can help you map out your financial goals in a way that makes sense to you and your lifestyle.