Our version of the 'Millennial Dream’ Now Costs $7 Million

While you might be more familiar with the classic “American Dream” — marriage, 2.5 kids, a Ford, and a home, the new ‘Millennial Dream’ is different.

The millennial lifestyle has a standard metropolitan aesthetic on full display from Spring through Fall. Open-concept luxury rental with white sterile walls paired with a coveted island with the goal of rotational entertainment. These expensive threads are flanked by fine dining, travel, and weekly deliveries from Amazon, Etsy, or Shein.

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The Price is Expensive. Get used to it.

Understandably, people are becoming outraged with the estimated $3.4M over a lifetime, according to Investopedia.

Why? Because most people can’t fathom reducing expenses to help their dollars go further, it’s a society of indulgence, excess, and entitlement. Welcome to Rome!

According to the U.S. Census Bureau, the median pretax income for millennials in 2020 was $71,566 or ($1,376 per week). If we bumped that number to $72,500 multiplied by 40 years of labor, that comes short of $3 million.

To make matters worse, the median net worth of millennials is $135,600. Over 50% of millennials have less than $10,000 in retirement savings, and 9% have between $500–$1,000.

Based on our current spending of $70,000–$90,000 per year, it’s likely that we would need $115,000–$144,000 per year (by 2050). No matter how you slice it, millennials require at least $5M to live this current lifestyle. Most don’t know it yet.

With all that said, how are we holding up in the TNFG household? Here’s the breakdown of our current and anticipated lifetime costs.

Current Costs of our Millennial Dream Estimated at $6M

The Power of Marriage: 2x Income and 2/3 Expenses – $640,000

Let’s start from the top with our engagement in 2019. According to the Knot, the average cost of a wedding and engagement ring is about $35,800. From travel, location, flowers, etc, you can likely pay more especially if you live in a different city than your home town. While some couples opt for the Destination Wedding, the entire guest list will flip the bill.

To keep it contained, we ended up spending $40,000. Instead of forcing 80 people to come to us, we aligned our wedding with Thanksgiving in my wife’s hometown. That total includes everything from the engagement to the day after the wedding. It’s fair to say that the cost will balloon again to $50,000 as the wedding price scales with perceived inflation.

Luxury Instagram weddings are going for an easy +$100,000. Beyond that cost of a wedding, we have two incomes and due to life efficiency, our combined expenses are less. I see marriage as double income and cutting expenses which can build wealth. However, most people succumb to spending even more.

Let’s add the annual travel, dinners, and ‘couple’s stuff’ for about $20,000 for 30 years.

Home and Rental Property – $400,000

Next up is where to stay (lodging). My wife and I live in a 2/2 condo in the DMV that I purchased for $132,500 and is currently worth $305,000. Our total home loan cost is $231,178 by the end of 30 years, although we will likely pay it off in 20 years. Beyond that, we anticipate buying a few more homes after our forever home. We also have a rental property valued at $125,000 at purchase. It should run us a total of $143,412. With repairs and renovations, this segment can cost us $400,000.

The current average lifetime cost of a home including a mortgage is $796,998, assuming a 10% down payment and a 30-year fixed rate of 7.2%. This number was calculated using September 2023 purchase and price rates from Zillow, the Consumer Financial Protection Bureau, and the St. Louis Fed.

Ally.com ran a story on the true cost of homeownership that’s worth a read.

EV, Hybrid, and Aging Cars – $156,250

Purchasing a used car is preferable to keep transportation costs down. Over a lifetime of purchasing six used cars, add around $271,330, according to 2023 data from iSeeCars.com.

As a new Hybrid car owner, I can attest that the cost is excessive. We pay nearly $900 per month for our 2023 car note. With insurance, we clock in over $12,500 annually for a 5-year loan. In total, we will pay north of $62,500. I anticipated at least 2 more cars in our future. With the average age of vehicles in operation rising, passenger cars hover around 14 years old. I can easily see families leaping for new car loans soon.

The Pandemic Pet – $25,000 x2

Having a pet was always a thing but the pandemic blew it up into a new airport lounge. Once relegated to two shelves, pet supplies are now entire aisles. Cat lovers to one side and Dog lovers to the other. The pet care mafia (industry) is expected to reach $363.19 billion by 2030. There is money to be made with convenient monthly subscriptions.

Either dog or cat, expect your furry anxiety buddy to live for 15 years, for $34,948 – $100,922, according to a Synchrony 2022 Lifetime of Care study. So far, we have one dog and he is costing us at least $1,500 annually. We even have to pay extra for flights and worry about dog-sitting on any given night.

We are likely to get another dog at some point.

Health Insurance -$1M

Based on KFF’s 2023 Employer Health Benefits survey, the average family premium costs add up to $934,752. Annual premiums for employer-sponsored family health coverage climbed to $23,968. The average employee paid $6,575, with a deductible of $1,735 for single coverage.

A 2022 study by Synchrony found that per capita lifetime expenditure is $316,600, a third higher for females ($361,200) than males ($268,700). The difference by gender is owed to women’s longer life expectancy. Additionally, one-third of lifetime expenditures are incurred during middle age, and nearly half during the senior years.

With no real dollar stats for this number and wifey’s Type 1 diabetes, I’m going with a flat $1 million.

Retiring Early or Live the Millennial Dream of Working over 70 – $3.75M

For simplicity, you should save at least eighty percent of your income for about 30 years. The calculation for the median income of $75,000 would put you at $1,800,000. Experts recommend at least $715,968, however, they aren’t buffering for inflation, increase in cost, and major expenditures like home renovation in later years. You would be better off not being broke in retirement.

By 2054, there will be 422,000 Americans over age 100. The population estimate is up from 0.03% today, according to a Pew Research Center analysis That poses a financial challenge. Many Americans will likely have to work past age 65 to fund longer retirements.

The caveat is that households should save as much and as early as possible. Without adequate preparation, the solution for most people is to work longer, well into their 70s. Doing so may yield more income. The hope is that people save for a longer time, delay drawing down their nest egg, and defer claiming Social Security benefits. Unlike 401(k) plans, social security provides guaranteed income for life. By delaying claiming to age 70, retirees can maximize their monthly checks.

For the TNFG household, we anticipate retiring by 50 with a cash need of $3,750,000. While I don’t think we will use all $125,000 per year, it’s still a great budget while we live overseas and contribute toward charitable efforts.

Wait, got to add Future Costs of the Millennial Dream or Nightmare – Estimated $820K

Hospital Birth and IVF – $10,000 – $20,000

According to Peterson-KFF’s 2018-2020 Health System Tracker analysis of MarketScan data, for one child, a hospital birth may cost $2,854 out-of-pocket. For those without insurance coverage, costs will likely be much higher.

For those considering, In vitro fertilization (IVF), it can cost between $12,000 and $30,000 per cycle. It will come down to the number of cycles, the facility, and other factors. The base fee, which usually covers monitoring appointments, bloodwork, egg retrieval, and follow-up care, can range from $9,000 to $14,000.

Raising Children to 18 – $800,000

In 2022, the average cost of childcare was $4,810 per year for school-age home-based care in small counties and $15,417 for infant center-based care in large counties. Adjusted for inflation, this amounts to $5,357 in 2022 dollars for school-age care, and $17,171 for infant center-based care, which is 8–19.3% of the median family income per child in paid care.

According to the U.S. Department of Agriculture’s 2015 Expenditures on Children by Families report, the average cost of raising two children to age 18 is $576,896. This is a lot. Since numbers can vary, I’m going to tack on an extra $200,000. We aren’t sending them to public school. They will go to some unique language school cause public school was like a prison for me. I rather my kids go to a school where I have to pay a mortgage for the outcome (hopefully).

College – We ain’t Paying

The current cost of one year at a public in-state four-year institution, including room and board, for two children is $50,000, per the National Center for Education Statistics. With private or Ivy League universities hovering near $100,000 per year, I’ll pass on this price tag. Got to see if the kids make it to that point.

Funeral – a Price on Death? $25,000 Max, Final Price.

According to the 2023 report from Policygenius, the average cost of a funeral with a viewing and a burial is $7,848. The average cost of a funeral with cremation is $6,000 to $7,000. These costs do not include a cemetery, monument, marker, or other things like flowers.

As a military veteran, bury me with those guys or cremate me. I’ll be dead so I won’t be concerned with the land of the living. I’m sure there is a Marine Corps hotline. My wife might want the burial and if we are living overseas, we will likely need an extra $5,000 for the final flight.

That’s about $12,500 max for both bodies, better take it or leave it. Through a highlight AI reel of my favorite photos and voila. Let’s say $25,000, the way inflation is going.