Why A $100,000 Salary Can’t Buy The American Dream

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.