The American Dream Is Super Expensive 🤑

According to a recent MarketWatch/YouGov poll, three out of four respondents think cost of living is a “major roadblock” to attaining the American dream. Sixty-four percent cite the cost of housing specifically. Respondents also mentioned corruption (55%), healthcare costs (52%) and taxes (45%) as other impediments. 

This is something that has bothered The Juice to no end for the last two years. The idea that the increased cost of housing poses a massive problem to millions of Americans, particularly young ones. 

Forget the American dream as an ideal. How about home ownership as a necessary element of long-term financial health? 

While there’s absolutely nothing wrong with renting, there’s often something wrong with carrying a hefty (and, potentially, increasing) rent payment into old age. 

Into retirement. 

If you manage to be free and clear of a housing payment, it’s obvious that you go into the second act of your life with a substantially lower cost of living. And it’s easier to build a financial future when you know you won’t have an outsized rent or mortgage payment to worry about when you scale back or quit work altogether. 

The MarketWatch story included several people who discussed how much they need to achieve the American dream. 

Here’s one of the examples from a person who says she and her spouse need to make $300,000 to live the dream:

That would allow her to pay a mortgage, raise kids, fund her retirement savings and live a life that feels secure and fulfilling, she said. The 32-year-old, who lives in Los Angeles and works as a litigation assistant, methodically detailed how she arrived at that figure, noting that $300,000 could be the total earned by her and her partner.

While (she) conceded that “you can definitely make it work with less than that,” she said she doesn’t want to struggle, and she wants to enjoy life. So for her, the American dream feels “out of reach in the present moment.”

She added: “You shouldn’t need this much just to make it work.” 

It shouldn’t be like this. And it’s not just an LA thing.

As we have pointed out too many times to count throughout the year in The Juice, you need a six-figure salary just to be able to afford the median-priced home in America. With the 30-year mortgage interest rate still flirting with 7% and the typical house in the United States selling for considerably more than $400,000, this isn’t changing anytime soon. 

And nobody is doing a damn thing about it. The culture war issues and threats to Social Security that make the headlines will do nothing to deal with what The Juice thinks is our nation’s biggest problem headed into 2025 — the cost of housing. 

It’s a huge contributor to the feeling among too many Americans that, to be happy, they need a ton of money. 

But, to our surprise, in at least one study, the amount people are striving for feels too low. 

A recent Cardrates.com survey found that 56% of people say a liquid net worth of $200,000 would make them content. Among people earning $40,000, 66% would be happy with a $100,000 salary. And, consistent with these types of studies, the more people make, the more they think they need to achieve happiness. 

For better or worse, this is merely American ambition on display. We equate money with happiness. We always want more. And the more we have, the more we want. So — generally speaking — we’re never happy? 

However, the problem, as it relates to the American dream data, is that the hamster wheel is spinning harder than ever. And The Juice doesn’t think even the people who think they need to have more money realize the full extent of it. 

According to those who said they’d be satisfied with a $200,000 net worth, they believe this amount of dough would “cover life’s unexpected expenses, provide a comfortable retirement, and allow for a few luxuries.” We’re not sure which world they live in, but how do you take care of all of the above with $200,000 unless you have additional, regular income coming in?

And the $100,00 salary. 

Here again, if we call the median price of a home in the US $420,000, you need to earn about $102,000 a year to afford the $2,549 monthly payment. You also need $84,000 to cover a 20% down payment. And this is for the typical house, something you just don’t find in abundance, if at all, in the nation’s largest metro areas.

The math is bad. And the math people are doing to make sense of it just doesn’t add up.  

The Bottom Line: The Juice thinks lots of people are waiting for a savior to fall from the sky on housing. Or they have just given up on home ownership. If this means you can save more for retirement, maybe this is okay. However, lots of people are struggling on this front as well, putting too many financial futures on unstable ground. 

We wish we had an answer. Other than tax the rich, which doesn’t seem to be the plan in Washington for 2025, it’s a tough nut to crack solution-wise. But, rest assured, The Juice will remain on the case in the New Year. 

In addition to continuing to fight the good fight on housing, we’ll focus on the good side of the personal financial equation. How you can modernize your long-term portfolio with just the right mix of traditional and alternative investments. But, before we kick our coverage of portfolio construction and alts into high gear, we close 2024 with our final edition of The Juice for the year on Monday, December 30th. 

In it, we look back on some of our most profitable stock picks (and maybe a loser or two, if we can find one!) of 2024. 

Preview: We crushed the game this year. So, give a friend a gift this holiday season. This email, forwarded to their inbox, along with the link to subscribe to The Juice for free!

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