More than half of Americans
say they would need at least $100,000 a year to be
financially comfortable. The benchmark of a six
figure salary used to be the gold standard income. It represented the tipping
point of finally earning a disposable income and
building a savings spending based on your wants, not
just your needs. The American Dream is what
makes a middle class lifestyle. You're able to
pay your bills. You're able to put food on
the table, put a roof over your family's head, and you
have some additional savings. Now, people making well over
six figures are still living paycheck to paycheck. What used to symbolize
financial freedom is now keeping people stressed
about making ends meet. 26% say they would need more
a salary in the range of $100,000 to $149,000 per
year would make them feel financially comfortable. I think, unfortunately, what
has happened is that wages haven't kept up with the
cost of living, by and large, for the last 50
years or so, and so it becomes increasingly hard
for many families to be able to attain that sort of
middle class lifestyle, that American dream. How much you need to feel
financially secure varies so much depending on not only
your geographical location, but of course, your
lifestyle. It used to be that a six figure salary
was like the gold standard, but nowadays that may not
be enough to make ends meet in certain parts of the
country, especially like New York or San Francisco,
where it costs so much more just to cover your daily
expenses. Here's why a $100,000
household income no longer buys the American Dream. GoBankingRates analyzed how
much a family of two adults and two children would need
in each state to own a home, a car and a pet, as well as
have an additional 20% of their income for savings
and 30% for discretionary spending. The core of what the
American Dream means is some amount of economic security
that you feel like you can get by and do a bit better,
maybe do better than your parents, maybe be able to
afford a house. Certainly be able to save
for your children's future. All 50 states require more
than a $100,000 annual income, with 38 states
needing more than $140,000. The most affordable states
— Mississippi, Arkansas and Kentucky — need between
$109,000 and $117,000. The median income for a
household of four people in each of those states in
2022 was between $71,000 and $87,000. Hawaii, California
and Massachusetts are the most expensive. Each requires an annual
income of more than $240,000. The median income
for a family of four in those three states in 2022
fell at least $94,000 short of what's required for the
American dream. A different analysis from AP
found that in about 80% of the country, a family of
four can afford their basic needs on less than $100,000
per year. Those include things such
as housing, food, transportation, health
care, child care, taxes and a few other basic
necessities. It doesn't take into account
anything extra. It's really just putting
food on the table, putting a roof over your head,
getting health care for your family and so you're not
saving for a rainy day if something happens to
somebody or if they lose their job. So there's no
extra in there for retirement, for kids
college. Those are the kinds of
things that many people want to save for. Those are the
many things that people consider a part of the
American dream. Only about 3% of those
counties have a median income higher than the
basic cost of living. The idea behind the American
Dream hasn't really changed, even though lifestyles
have. It used to be that you
could get out of school, get a job, buy a home, and
start a family. And now those milestones
are harder to achieve. It used to be that a high
school degree, you're good to go. You could get a
great job building cars or something and be right in
the middle class off of a high school degree. But
now, in order to get into the middle class, a high
school degree is clearly not enough. Right now, you got
to pay for college. People are graduating with
much larger student loan balances, and then it's
harder to be on that same sort of career trajectory
that would provide the stability that you maybe
would have had a generation ago to save up for the down
payment on a home. Student loan debt reached an
all time high of $1.77 trillion in the first
quarter of 2023. This can have a ripple
effect, especially when entire generations are
starting their adulthoods with thousands of dollars
in debt. So when we think about the
kinds of investments you want to make for your
children, the cost of college has gone up a lot
faster than overall inflation. So trying to
make those investments on a smaller and smaller
paycheck compared to the cost of living can be very
difficult and almost impossible. And so the
kinds of debt that young people can rack up going to
college gets larger and larger, and your ability to
then make ends meet yourself, be able to buy a
car, be able to move out of your parents house. Those
things become much more difficult over time. The American Dream typically
is people owning property and having children, but
that's becoming largely inaccessible for many
people, and even those who have attained these things
are finding themselves managing every dollar
coming in and out just to stay afloat. So that trade
off is underlying the new cost of the American dream. Millennials and Gen Zers
still want to buy homes despite feeling like they
can't afford it. 62% of younger millennials
and 63% of Gen Zers still say owning a home is part
of the American dream. 66% of U.S. Renters surveyed say rising
prices leave them feeling hopeless about ever owning
a home. 72% of respondents say they
can't afford the down payment. 17% of all home
buyers said that saving for the down payment was the
most difficult task in the buying process, and 52%
said student loan debt delayed their ability to
save. The typical first time
homebuyer in 2022 had a household income of
$95,900. Nationally, a prospective
home buyer would need a nearly $110,000 salary to
afford the principal interest, taxes and
insurance payments on a median price home. But the median household
income in the United States in 2022 was a little under
$75,000. If you're born into a nice
neighborhood, which your parents have lots of wealth
and lots of income, your chances of doing well are
vastly improved. The part that's home
ownership. Collectively, Americans owe
$1.13 trillion on their credit cards. Inflation -- it's eroding
people's purchasing power. It's reducing their ability
to save for their future or invest in these longterm
goals. So that loss of financial
stability can create a sense of powerlessness and
insecurity, and contribute to feelings of uncertainty
and vulnerability. It can really impact
people's self-esteem, their resilience, their overall
psychological health. Economists have suggested
that debt growth became a substitution for income
growth. More than a quarter of
Americans said that they are doom spending or spending
money despite economic concerns. There's also this idea that
young adults are feeling more discouraged in their
own financial standing. So in that way, they're are
less inclined to even save for long time goals and
more likely to just live in the moment. It's just sort
of that mentality, like you only live once. I may not buy a home
anyway, so let's take that trip or let's go to that
event, whether it's a Taylor Swift concert or other, you
know, big ticket item. 73% of Gen Zers say the
current economy makes it difficult to set up long
time goals. And it's not just about
revenge spending, it's just about wanting to enjoy life
and make the most of what you have, even if you can't
necessarily buy that home or you know you're not
starting a family just yet and you really want to, you
know, feel good about yourself in the moment. People are indulging to the
extreme, and I think we often buy because we think
that it's going to change our life or it's going to
give us this emotion that we feel like we're missing. And it's like an endless
trail of spending and constantly going to make us
feel empty because we're externalizing something
that we need to give to ourselves. I think that's a
big issue with consumerism, and it's running rampant. Social media has changed the
conversation so much, because there's just been
this abundance of the ability to see these
glamorous, glorified lifestyles. It's not only
celebrities that are presenting themselves this
way, but even your own peers, which makes a lot of
people feel like they're just not measuring up. They can't financially
compete with what they're seeing online. It has left a lot of
people, especially young adults, feeling very
discouraged in their own financial standing. Even if they're doing okay,
they just may not feel that way when they compare
themselves to what they're seeing on social media. The question is, are you
able, given kind of the luck of the birth lottery, are
you able to have opportunities that are the
same as those of people who may have been born into
families that are in better circumstances than your
own? The American dream is all
about it shouldn't matter. The birth lottery shouldn't
matter, right? So it's deeply relative.
