It has long been said that the American dream is to get married, buy a house in the suburbs with a picket fence, raise two and a half children and enjoy a comfortable retirement. This dream has come true for many of our Boomer grandparents and parents.
However, realizing this dream has become difficult, if not impossible, for millennials like me and Americans of Generation Z. What or who is to blame for the dying American dream?
Some may argue that the government’s decision to shut down during COVID is to blame. Others might point the finger at changing generational priorities.
However, many would also blame a Biden administration that prefers to deceive Americans with Bidenomics while ignoring the lived reality of the country. The answer is my favorite multiple choice option: all of the above.
A high price
According to a recent analysis by Investopedia, the American dream is estimated to cost a whopping $3,455,305 over a lifetime. With an average of 48 years of work, Americans would need to earn $72,000 a year to produce the nut.
The “American dream” as defined in this analysis involves:
- marriage
- two kids
- a house
- health care
- used vehicles
- education costs
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The analysis analyzed average costs using data from numerous reliable purchasing sources, obtaining the following breakdown:
- get married: $35,800
- owning a home: $796,998
- give birth to two children: $5,708
- Lifetime used car costs: $271,330
- costs of a dog and a cat: between $34,948 and $100,922
- health insurance: $934,752
- raising two children: $576,896
- one year of college for two children: $42,070
- Average retirement needs: $715,968
- Funeral costs: $7,848
The average lifetime earnings of Americans, regardless of education level, is just $2.3 million. With numbers like that, it’s no wonder young Americans are rethinking marriage, not to mention having children.
Forget the house
Like many millennials, I was incessantly taught that renting rather than buying was a waste of money. Why pay someone else’s mortgage when you can own your own home?
My path to homeownership is probably different than most. I rented most of my young adult life because I was in the military and moved about every two years.
However, after military retirement, my husband and I intended to continue renting at least until the kids went off to college and perhaps into our 60s. We appreciated the freedom of renting and loved our three bedroom, two and a half bath townhome.
Family health issues with my parents forced us to purchase the four-bedroom, three-and-a-half-bathroom house we live in now. Even though we’ve grown to love our home, it’s not lost on me that it costs more than double what it costs to afford this home each year compared to renting our beloved townhome.
According to real estate data firm ATTOM, renting a three-bedroom home is more affordable than owning a comparably sized home in nearly 90% of local U.S. markets. Realtor and Tik Tokker Freddie Smith explains the evolving reality of homeownership:
“In 1970, the average home cost $15,000. Now the average home is $436,000. It went up 29 times.”
Mr. Smith goes on to illustrate:
“You could make about $60,000 a year and qualify for a house in 2019. That same house costs $436,000 today, but interest rates are 7.5%…”
He concludes this analysis with the reality that:
“It now takes over $100,000 in salary to qualify for the average home in America.”
The average annual salary in this country is just $59,000. Do you see the problem?
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Is it time for a new dream?
It’s easy to say that millennials and Gen Z refuse to grow up and would rather complain than work hard for their dreams. But this argument is devoid of nuance.
Inflation has “officially” increased by 17% since January 2021. The average increase in hourly wages has not remained at the 13.6% level: the point is that life is much more expensive than it was for Gen X, not to mention the Boomers.
It’s not just millennials who are realizing the reality of American life. John Gerzema, CEO of Harris Poll, said Gen Z respondents have the following to say about homeownership:
“They tell us they can’t accept that American dream the way their parents and grandparents thought of it, because it’s not achievable.”
Given that young Americans believe that the cornerstone of the American dream is impossible to achieve, it is no wonder that the United States seems bleaker. The World Happiness Report released recent statistics, and for the first time since the report began more than a decade ago, the United States is not among the top 20 happiest countries.
For Americans over 60, the United States ranked in the top 10. For Americans under 30, the United States ranked 62nd.
It is not the perceived laziness of Gen Z or the alleged emotional instability of Millennials that is killing the American dream. That ownership belongs to career politicians on both sides of the aisle in Washington who have shut down the country and continued to promote failed Bidenomics.
What will save the American dream is a new dream built by the next generation. Let’s hope we have a good foundation, otherwise we could find ourselves more than simply dreamless.
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