She has done the math and knows that Brooke Scott wants to live her own American dream. She said she needs to make $300,000 a year to get there.
So she could pay her home, raise her kids, put money into her retirement account, and live a safe and happy life, she said. The 32-year-old woman from Los Angeles, who works as a legal assistant, carefully explained how she came up with that number. She said that $300,000 could be the total amount of money she and her partner made.
Scott agreed that “you can definitely make it work with less than that,” but she told her that she doesn’t want to fight and just wants to enjoy life. She feels like the American dream is “out of reach right now.”
“You shouldn’t need this much just to make it work,” she said.
When you hear the words “American dream,” you might picture a better life. It’s still a goal for many, but the things that make it hard to reach have changed over time, as have how people see those things.
A YouGov study for MarketWatch found that when people were asked to name the things that kept older generations from achieving the American dream, racism, corruption, and economic inequality came out on top. What people said was that everyday costs are the biggest problem right now.
The poll found that three quarters of people said the high cost of living made it hard to reach the American dream. The five most common problems were the cost of housing, health care, taxes, and other government fees.
It was the fourth hardest thing for people in the past when asked about problems they had to deal with.
‘It was striking, when I was going through this, how many kinds of costs people were pointing to.’
Carl Bialik, U.S. politics editor and vice president of data science at YouGov
“It was striking, when I was going through this, how many kinds of costs people were pointing to,” said Carl Bialik, U.S. politics editor and vice president of data science at YouGov.
YouGov conducted the survey in August. Separately, MarketWatch spoke with people about how much money they say they need to live the American dream.
It’s been two years since inflation rates in the U.S. caused costs of goods and services to rise very quickly. Year over year, inflation dropped to 2.6% in October, from a high of 9.1% in June 2022 that had been in place for 40 years.
But there is still a problem with cost, as many people who want to buy a house, a car, or pay for child care can attest.
That was also made very clear by voters this year, who voiced their anger over money issues in a race that sent former President Donald Trump back to the White House. Hillary Clinton, the Democratic candidate, and Donald Trump, the Republican nominee, fought for months over who would be best at lowering high costs.
People who answered polls before and after the election said that the economy was one of their most important problems, if not the most important issue. But people say that high prices aren’t just a problem for them every day; they say that high prices are also affecting their idea of success and their ability to get ahead.
‘My version of success is being able to live comfortably with a reasonable amount of excess so that you don’t worry.’
Christopher Kneeland
“For me, success means having enough extra money to live comfortably without having to worry about…. making ends meet.” Chris Kneeland, 23, who graduated from college last spring and is looking for a marketing job, said, “Not being a baller and having tons of money, but enough that you can do extra things with your life.” He’s been doing independent work while he looks.
Kneeland, who lives in the Boston area, said he’d need to make between $150,000 and $200,000 a year to reach that level of happiness. According to the Census Bureau, the median income in the United States was $80,610 last year. That would be about twice that amount, and it would be more than the median income in Massachusetts, which is almost $100,000.
According to a national poll done in May, Kneeland wants to make about $186,000 a year, which is about the same amount of money that most people
say they need to live happily.
Kneeland’s mother used to be a hairdresser but is now mostly retired after many years in the business. At one point, she had her own beauty booth. His dad is almost done with working as a building repair worker for a long time.
He said that they bought a house and raised two kids in the Boston area. They had achieved the American dream.
With the way things are now, could they still reach their goals? Knieland said, “I don’t think they could.”
Not out completely, but dimmed
Adams, a historian, wrote about what he called “that American dream” in 1931. He said it was “a better, richer, and happier life for all our citizens of every rank” and that it was “the greatest contribution we have yet made to the thought and welfare of the world.”
John Haddad, an American studies professor at Penn State Harrisburg, said that Adams “didn’t invent the idea.” “He named it.”
The Puritans are credited with giving the American version of the idea that working hard will make your life better. Haddad said that the theme also showed up in Benjamin Franklin’s important autobiography, which was written in the late 1700s, and in Horatio Alger’s “rags-to-riches” stories, which were written in the late 1800s.
Did the economic boom after World War II mark ‘the greatest period of the American dream’ ?
But it was the economic boom that followed World War II that defined what Haddad says was the “greatest period of the American dream,” stretching roughly from 1945 to the early 1970s.
That era was ushered in by the Servicemen’s Readjustment Act of 1944 — commonly known as the G.I. Bill — which Haddad calls “arguably the greatest piece of legislation in U.S. history.” The law solved an affordability challenge, he said, by giving veterans the ability to obtain home loans and college educations. “The G.I. Bill really gave access to the American dream. It gave you the ladder.”
Haddad defines the American dream as “becoming your best self, forming a vision of your future self and then methodically taking steps necessary to actualize that vision.” That could mean becoming rich or being a community leader or a good parent or something else, he said. “You get to decide what your American dream is.”
How people today define the American dream
When YouGov asked what the American dream means to people today, many responses had to do with money, including “becoming debt free,” “being able to achieve what I want to do in life,” “being able to afford a house and raise a family,” to “raise a family relatively easily without working two jobs” and “to live and survive in America.”
Among 100 responses randomly selected from the total sample of over 1,100, Bialik said, around half were “explicitly economic” and another quarter were economic by implication, with references to success. The remainder mostly focused on freedom and patriotism, he said.
For several years, YouGov has been asking about the American dream and whether people think it’s personally attainable. Most people say the idea is still alive, but younger people aren’t convinced they can achieve it. “It’s fallen off quite a bit,” Bialik said.
Don’t tell that to Wellington Moreno, a naturalized U.S. citizen who was born in the Dominican Republic and came to the U.S. around age 4. “It’s obtainable. It’s beautiful. It’s worth celebrating,” he said.
His aunts, uncles and cousins who still live in the Dominican Republic cope with power outages, spotty internet and worries about crime that many Americans may not understand firsthand.
“It’s obtainable. It’s beautiful. It’s worth celebrating,” said Wellington Moreno of the American dream. Photo: Courtesy Wellington Moreno
“I have a certain perspective on what really poor actually is, and how high you can go,” Moreno, 35, told MarketWatch. “Here, the sky is the limit. The sky is not even the limit — it’s limitless.” Moreno, a former software engineer who lives in Las Vegas, is now a reservist in the National Guard and just got his real-estate license.
The cost of living is a stumbling block that Moreno said he knows well as he strives to stick to a monthly food budget for himself, his girlfriend and their 1-year-old daughter. But getting ahead is a mindset, he said, adding that he makes decisions that let him control what he can.
“The prices, the cost of living — these are things coming to us. It’s going to impact us, but what are we going to do about it?” said Moreno. “Go from dream to goal to plan to reality.”
A $1 million net worth and a paid-off house are the milestones for Moreno’s American dream. He’s 100% certain he’ll get there, he said.
Is the American dream easier to achieve than it used to be?
Back in Los Angeles, Brooke Scott, who is Black, remembers a story about when her family lived in Wichita, Kan., decades ago. Her mother had phoned a landlord who sounded excited to meet his potential tenants, but the man’s demeanor completely changed when Scott’s parents arrived to see the place. They successfully sued for housing discrimination, she said.
Even if prejudice and discrimination have receded as perceived barriers to a better life, they haven’t disappeared, people who spoke with MarketWatch said. Maybe they’re just “less visible, or internalized,” Scott said.
Racial discrimination still exists in the housing and labor markets, along with a racial wealth gap that persists between white, Black and Hispanic families. Redlining, a tactic used to prevent people of color from getting mortgages in certain areas, was outlawed by the 1968 Fair Housing Act, yet reports continue to show evidence of racial discrimination in mortgage lending, home appraisals and other areas.
Homeownership rates increased for all racial and ethnic groups between 2012 and 2022, according to the National Association of Realtors, but the increases were uneven, with Black homeowners seeing the smallest increase over that period.
Two-thirds of Black respondents to the YouGov survey said the biggest current barrier to achieving the American dream was the cost of living, followed by prejudice and discrimination. When asked about their perceptions of prior generations’ barriers, Black participants named prejudice and discrimination as the No. 1 barrier.
For the poll respondents as a whole, across all racial groups, prejudice and discrimination ranked ninth on the list of current perceived barriers. When asked about obstacles faced by previous generations, respondents said they thought prejudice and discrimination was the biggest one.
One encouraging sign, and one worrying one
Did the YouGov survey participants get it right about what used to make it hard to get ahead? It’s difficult to use current perceptions to gauge how hard it was for previous generations to achieve their version of the American dream. But Haddad agreed with the poll participants who counted prejudice and discrimination as the top hurdle for previous generations.
There are cultural clues to support that theory, he noted, like the widespread popularity in its day of Lorraine Hansberry’s 1959 play, “A Raisin in the Sun,” and the impact of Betty Friedan’s 1963 book, “The Feminine Mystique.”
Friedan studied dissatisfied housewives “almost like they are in someone else’s American dream, not their own,” Haddad said. Meanwhile, Hansberry’s play portrayed the diverging dreams of members of a Black family in Chicago as they purchase a home in an all-white neighborhood, a plot inspired by Hansberry’s family’s own experience with a racially restrictive covenant. The play’s title comes from the third line of Langston Hughes’s 1951 poem “Harlem,” which begins by asking, “What happens to a dream deferred?”
‘You need capital to launch yourself.’
John Haddad, professor of American studies, Penn State Harrisburg
Haddad takes a long view of American history. The fading of prejudice and discrimination as a perceived barrier is encouraging, he said, but it’s discouraging that the cost of living has taken its place. “You need capital to launch yourself,” said Haddad, who is also the interim director of Penn State Harrisburg’s School of Business Administration. Women in particular feel that money pressures are holding them back, with 79% telling YouGov that the cost of living was a block to achieving their American dream, compared with 69% of men.
In 2017 — before the recent inflation spike — a study tracked how finances have influenced people’s chances of achieving the American dream. The researchers noted that while the exact definition of that dream varies across generations, “one constant is that children expect to do better — or at least to have a good chance at doing better — than their parents.”
Those chances, however, have dwindled significantly over time. Children born in 1940 had a 9-in-10 chance of making more money than their parents, according to the study. Yet people born in the late 1980s had only a 50/50 chance of doing the same, the research said.
The researchers, including economist Raj Chetty of Harvard University, wrote that the best hope for reviving the American dream of children being better off than their parents is to have “economic growth that is spread more broadly across the income distribution.”
But as wages have largely stagnated over the past few decades, especially for low- and middle-income workers, the opposite has happened: Wealth in the U.S. is increasingly concentrated at the top. The richest 10% of American households held 66.9% of the country’s wealth during the first quarter of 2024. In 1990, the top 10% held 60.5% of the wealth, Federal Reserve data shows.
Would the conclusions Chetty and his colleagues reached in 2017 be any different if they ran their study again in 2024? While it’s difficult to say, he told MarketWatch in an email, “I’m guessing we’d be in roughly the same place.”
‘You really have to have tenacity’
With much of the responsibility for long-term financial planning falling squarely on the individual, people can succeed as long as they focus on saving, said Wellington Moreno, who uses a budgeting spreadsheet and follows the advice of Dave Ramsey, a popular personal-finance commentator who stresses personal responsibility.
“A great tool we have in this country is called the 401(k),” because it’s meant to focus the mind on retirement, Moreno said. After tapping into his retirement account to pay off debts when he was in his 20s, he said, “as a 30-year-old, I started at zero. I learned a lesson. You want to build that up and feed it.”
Of course, saving for later is just another cost, and it’s one that is required to a greater degree for people today than it was for previous generations. The guarantee of an employer-funded pension fell away as companies began pulling back on such plans with the advent of the 401(k) in the 1980s. Now the guarantee of Social Security payments seems wobbly, too: At the current rate of depletion of its trust funds, in 2035, Social Security will be able to pay out only 83% of scheduled benefits.
In 2035, Darwin Stephens, now 44, will be in the midst of his peak earning years. At that point, he’ll still have seven years before he can claim any Social Security benefits.
Darwin Stephens is getting his bachelor’s degree with the goal of one day running his own real-estate brokerage. “It does require you to have a certain mindset to be as successful as, or even better than, prior generations,” he said. Photo: Courtesy Darwin Stephens
This fall, Stephens, who is a real-estate agent in Dallas, and his brother were visiting their 86-year-old grandmother when the topic of Social Security payments came up. The brothers told her they doubted they’d see those payments for themselves.
“Her eyes got so big — like, shocked,” Stephens said. He remembered laughing in frustration. As he saw it, her surprise captured how removed many older people are from the retirement-savings crisis that younger people are facing. It makes the YouGov polling results resonate with him.
‘For the basic dream of being able to retire and not stress, she has it, and we don’t right now.’
Darwin Stephens
“For the basic dream of being able to retire and not stress, she has it, and we don’t right now,” he said. That doesn’t even count the extra money it would take to build a business and give back to the community — two things Stephens said he wants to do.
He is getting his bachelor’s degree with the goal of one day running his own real-estate brokerage. “The road is harder. It’s much harder. You really have to have tenacity,” he said. “It does require you to have a certain mindset to be as successful as, or even better than, prior generations.”
How much would he need to earn in order to achieve his American dream? He puts the figure somewhere in the range of $150,000 to $180,000 — at a minimum.
“I’ll get there,” he said. “I’m not doubting that, but I’m hoping it’s enough to do what I plan to do with my money.”
