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Can you afford the 'American Dream?' Study shows the ideal lifestyle costs $130,357 per year

Friday, July 4, 2014 15:42

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Can you afford the ‘American Dream?’ Study shows the ideal lifestyle costs $130,357 per year

· USA Today calculated the cost by adding expenses including home ownership, children, groceries, retirement planning, and health care

· It’s estimated only 1 in 8 households can afford the American Dream

· Fewer families believe the Dream is in their reach, according to recent survey

A new analysis shows that only 1 in 8 families could afford the cost of living what’s commonly known as the American Dream in 2014.

Inspired by the new book ‘Chasing the American Dream,’ about the cost of the financial crisis, housing bubble, and Great Recession, reporters at USA Today calculated the cost of all those elements that make up the American Dream.

For the project they included the costs of home ownership, moderate-cost groceries, a car, health insurance, taxes, educational expenses for your children, and retirement planning.

A new study shows only one family in eight can afford home ownership, children, retirement savings, and all the other things typically promised in the American Dream

They reached an average total of $130,357 per year in household income.

WHAT IS THE COST OF THE AMERICAN DREAM?

Here’s how USA Today broke down the average expenses to live comfortably and raise children:

Home ownership – $17,062 per year

Groceries – $12,659 for a family of four

Transportation – $11,039 a year for a four-wheel-drive SUV

Health Care – An average of $9,144 for out-of-pocket costs and premiums

Total taxes – Roughly 30 per cent of all income

Education – $4,000 per year for two children plus approximately $2,500 per child for college savings

Retirement – The maximum pretax contribution to a retirement plan for people under 50 in this income level is approximately $17,500

In a country where the median household income is roughly $51,000, that’s a dream well out of reach for most people.

In fact only 16 million households in America earned that much last year.

Thomas Hirschl, a professor at Cornell University who co-authored the book, noted that most people surveyed did not desire to become one of the 1 per cent of earners, only to have a decent life.

‘It’s not about getting rich and making a lot of money. It’s about security,’ he said. He added that they also wanted to see their children succeed.

‘They want to feel that their children are going to have a better life than they do,’ Hirschl added.

Source: http://nesaranews.blogspot.com/2014/07/can-you-afford-american-dream-study.html

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Comments

Total 2 comments

Dustdevil

Having earned that much (or more) until I retired in 2009, I have to fully agree and say that at $130k, you would only be on the bottom end of making it to that dream, at that. More like $175k to be in the ‘solid ground’ of it, actually.

The mortgage is correct, the two autos (with payments and insurance) are closer to $17k. The insurance and retirement are close values, but you left off some big items, like taxes (my last working year taxes were $22k for state and federal – slightly more than the official poverty line income), and of course, let’s not forget student loans, if any; as well as debt still floating (like for credit cards, short term signature loans, etc.). In reality, you probably are carrying $2k in loans and revolving debt, if you are ‘middle class’, too. Hence, why I say the value is quite a bit higher than referenced.

The bad part is, not only are the age, experience and education being taken out of the workforce, but the downgrading is like gutting a fish – that fish isn’t going to swim once you do that to him, either. Neither will America. You can’t fire a 35-person engineering department and force the Masters Degree or PhD Engineering Director to take retirement, and replace that whole department with 8 community college drafters and say ‘we have streamlined our engineering group’. No, you fired your engineers, and put artists there instead. Explain that in court, when that next ignition switch fails, or that next brake system on your car stops working.

Oh, well, like musical chairs, I was one of the lucky ones. I played the game to the end, and though my ‘retirement’ is far less than my working salary was, at least I made it to the end of my duty time. I have a paycheck still, I have a home, I have security. It’s not me that is actually the problem. It never was. I made a lot, I paid a lot of tax, I contributed a lot in return for what I received.

Good luck to those drafters. I highly doubt they will get a retirement at all. Not unless it is some euthanasia shot at the end of a short career. Good luck with Orwell’s 1984 vision. The book made me cringe, the movie was quite bleak too. They’ve convinced the young that it is the vision of a wonderful future, and the kids have bought into it. I think that myopic fantasy viewpoint is what makes my jaw drop open, more than anything else.

Jul 4, 2014, 11:32 pm 0 Reply
- CrowPie
  
  You really are deluded if you think that young people believe that 1984 is a “good vision” for the future, or that your retirement check is secure. What company (or government) is bound by its commitments in this day and age? After all….even the veterans are being cheated out their healthcare and politicians want to drop Soc. Security and Medicare. Why wouldn’t YOUR retirement company decide to bail on its obligations?
  
  Your not the only one who has paid a great deal in taxes…..and your not the only one who thought they had all their bases covered.
  
  Life happens. God forbid it happens to you.
  
  Jul 4, 2014, 11:55 pm 0 Reply

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