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New American dream

The Association of American Residents Overseas (AARO) estimates that at least 5.4 million Americans lived abroad in 2023. The biggest share of expats (40%) are thought to live in the Western hemisphere — Canada, Central and South America — or Europe (26%), while 14% headed to East Asia and the Pacific.

Elise described in a video posted June 23 that for some the new dream was to “pack up and head to a quiet European town or a beachside village in Asia; somewhere where we aren’t being poisoned by our food, we don’t need 2-3 jobs to survive and where health care isn’t the luxury but the norm.

“Some place where people stop and appreciate the little things and enjoy the slow life; a safe place where the community comes together and supports one another.”

Clearly, the young American is searching for more affordability and flexibility than she believes she can experience in the U.S.

It has been a tricky few years from an affordability standpoint for many Americans. The Federal Reserve’s efforts to curb post-pandemic inflation by hiking interest rates have increased the cost of borrowing and reduced Americans’ purchasing power.

This has forced a lot of Americans to focus more on short-term goals (paying rent on time and putting food on the table) over longer-term goals (homeownership, raising a family and retirement) that one might traditionally associate with the American dream.

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Dollars behind the dream

Cost is one key factor behind the demise of the American dream.

Recent analysis by Investopedia revealed that you now need a whopping $3.4 million to cover the costs of traditional American dream milestones such as marriage, raising children and owning a home.

But most Americans fall short of that target by over a million dollars. The average lifetime earnings of Americans across all education levels is closer to $2.3 million, according to Investopedia, leaving a big financial gap that’s forcing people to reassess their life goals.

“We’ve been misled to believe that life is about enduring our circumstances and place of birth, but it is not a requirement in life that you have to stay in the same place you were born and spend your life struggling,” Elise said in her video. “The fact is, the old American dream just simply does not serve us anymore.”

One look at the attainability of a basic element of the traditional American dream — homeownership — is telling.

According to real estate brokerage Redfin, 2023 was the least affordable year for home buying on record. To buy a median-priced home, worth $408,806, with the median U.S. income $78,642, you would’ve had to spend a record 41.4% of your earnings on housing costs, up from 38.7% in 2022 and 31.0% in 2021.

To buy that same home without spending more than 30% of your income — a popular rule of thumb among personal finance experts — you would need an annual salary of $109,868, according to Redfin, which is $31,226 more than the typical household makes in a year.

It's not all about the money

Many markers of the old dream are simply out of reach for a number of Americans, which has led them to adjust their priorities.

A majority of Americans (51%) would be willing to take a 20% pay cut to achieve a lifestyle that focuses on quality of life, according to a recent survey by automaker Ford. Millennials were most willing to trade income for a better work-life balance at 60%, followed by Gen Z at 56%, Gen X at 43% and baby boomers at 33%.

Interestingly, while 72% of Americans agreed it isn’t worth working a job that increases your personal stress, more baby boomers answered in the affirmative (79%) than Gen X (72%), millennials (63%) and Gen Z (66%).

Is it possible to achieve a balanced personal life on limited income?

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Freedom and flexibility

Elise extols the virtues of being a digital nomad.

“Hands down, the best part about being a U.S. citizen is our ability to leave the U.S. and travel abroad to seek out a better life,” Elise said. “Let’s take a moment to recognize how lucky we are that we can leave.

“Let’s focus on getting remote jobs or building online businesses, grab our passports and take advantage of the fact that, because of the internet, we have the ability to earn U.S.-level income from anywhere in the world.”

The lifestyle Elise is describing bears some resemblance to parts of the traditional American dream — notably the notions of equal opportunity and prosperity through hard work and determination — just not in the U.S.

Rather than trying to achieve a certain social status based on assets owned, perhaps the American dream today is more about an attitude that Americans carry with them wherever they are in the world.

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Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.

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