Editor’s note: Marshall Brain – futurist, inventor, NCSU professor, writer and creator of “How Stuff Works” is a contributor to WRAL TechWire.  Brain takes a serious as well as entertaining look at a world of possibilities for Earth and the human race.  He’s also author of “The Doomsday Book: The Science Behind Humanity’s Greatest Threats.” Today he looks at the economic challenges facing Americans today – a doomsday scenario in the making. 

Note to readers: WRAL TechWire would like to hear from you about views expressed by our contributors. Please send email to: info@wraltechwire.com.


RALEIGH – There is a fascinating factoid that you might have seen in your recent news feed. It is the amount of money that Americans think they need in order to live a comfortable life, also known as a middle-class life. Articles like these tell the tale:

$233,000 might seem like a huge number. That’s because the median household income in the United States is only $71,000 right now (https://www.census.gov/library/visualizations/2022/comm/median-household-income.html). But if $233,000 is accurate, it shows two things:

  1. It shows how out-of-whack wages have gotten compared with the true cost of living.
  2. It shows how the feelings we all have about a “cost of living crisis”, exacerbated by inflation, is a real thing that is having a huge impact on people.

Therefore, let’s look at a family of four trying to make it in America today. This family consists of two parents and two children. If this family wants to live a “normal middle-class lifestyle” in America today, how much would it cost if we break everything down and understand the real costs?

We do have to think about location, because there are cities in the United States where the cost of living is much higher than the norm. This video from last year talks about a Harvard study that indicates a family needs to make $181,000 a year to afford the median-priced home in Massachusetts – https://www.youtube.com/watch?v=bStWh7WhctE

We are going to choose Raleigh, NC as our base city for this breakdown. Raleigh is the 41st largest city in the U.S., meaning that it sits in the middle between the highest and lowest cost of living cities.

Our Family of Four needs a house – $51,000 per year

In the common version of the American Dream, a typical family lives in a house, also known as a detached single-family dwelling. What might this look like in Raleigh? I am going to use the house that my wife grew up in as an example. This house was built in 1967 and my wife’s parents bought it new for about $30,000. They have lived in it ever since.

This house has 4 bedrooms and 3 bathrooms. It is 2,094 square feet. It has a front yard, a fenced backyard, and a two-car garage. This is an absolutely typical American house. If our family bought the house today, the Zestimate on Zillow is $535,000, or $255 per square foot.

There are a couple of things to note here:

  • Back in 2019, pre-Covid, the cost per square foot was more like $150. Housing prices in Raleigh (and many other cities) exploded during Covid.
  • If we use an inflation calculator and apply it to the price of $30,000 in 1967, this house should be worth $278,000 today, not $535,000. Therefore, the price of this house rose about twice as fast as inflation over the past 56 years.

If our family of four wants to buy this house and takes out a $500,000 mortgage at 7.25% to do it, the monthly mortgage payment will be $3,400. In addition:

  • Many neighborhoods have monthly homeowners’ fees, so let’s assume $50 per month.
  • Homeowners insurance would come in around $100 per month.
  • Property taxes will be about $300 per month.
  • There are costs to maintain the house. Every 25 or 30 years it needs a new roof. Appliances like water heaters and refrigerators might last 10 to 15 years. The HVAC unit lasts 15 years. The house needs to be painted periodically. The yard needs to be mowed and fertilized. Let’s call this $200 per month on average.
  • There are home furnishings. Every so often the family needs a new TV, a new computer, a new sofa, a new mattress, or new carpets. Let’s allocate $200 per month on average.
  • We are going to ignore the cost of things like remodeling the kitchen after X years, upgrading the bathrooms periodically, repainting the interior, etc.
  • We are also ignoring things like security systems, lawn services, housekeeping services, bug services, hedge-trimming services, Christmas and other seasonal decorations, etc.

This house is costing $4,250 per month, or $51,000 per year.

The house has utilities – $6,500 per year

Any house in America today is going to have at least four utilities that the homeowners need to pay for on a monthly basis:

  • Water (which usually also includes sewer and garbage collection), about $100 per month
  • Natural gas, about $100 per month
  • Electricity, about $100 per month
  • Internet, maybe cable TV, about $70 per month

Utilities are costing $4,440 per year.

If we add in subscriptions for things like Netflix and Disney+, the round number might be $5,000 per year.

Then there are cell phones. Each adult needs a “nice phone” and connection to a service like Verizon or T-Mobile. Let’s call this $65 per month per phone, or $1,500 per year total.

The family has two cars – $24,000 per year

In a typical American household, both parents work. So the family needs two cars. The average American car today costs $48,000 [https://www.caranddriver.com/news/a43611570/average-new-car-price-down-still-high/]. The family can get an 8% loan for 6 years and pay $840 per month for each car.

Assuming each car is driven 12,000 miles per year, and gets 30 MPG, then:

  • Car insurance might be $100 per car per month
  • Gas is $100 per car per month
  • Tires are $20 per car per month
  • Other odds and ends (oil changes, windshield wipers, periodic washing, inspections, maintenance, etc.) might average $30 per car per month

In round numbers, each car is costing $1,000 per month, so the family is paying a total of $24,000 for transportation.

The family needs to eat – $10,000 per year

We could have a long discussion about food costs, because our estimates depend on so many different things. To simplify, let’s assume it costs $10 per day to feed an adult in groceries, and then once a week the adult goes to a restaurant for $30. This implies about $420 per adult per month, or $10,080 for both adults per year.

What about the children? $53,280 per year for the pair

Children are expensive. When they are toddlers they need lots of diapers and child care. As they get older, they need things like after-school activities, driving lessons, and braces. They add to healthcare costs. They add to food costs. They are constantly making messes.

The easiest way to account for the cost of two children is to take an aggregate number. For example:

“Raising a child can be an emotionally rewarding experience. But it can also be very costly. Statistics from the Brookings Institution, an economic think tank, show that the average middle-income family with two children will spend $310,605 to raise a child born in 2015 up to age 17.”

This is $18,240 per child per year, or $36,480 per year for the pair.

Then there are college costs:

“Ideally, you should save at least $250 per month if you anticipate your child attending an in-state college (four years, public), $450 per month for an out-of-state public four-year college, and $550 per month for a private non-profit four-year college, from birth to college enrollment.”

Let’s pick a middle-of-the-road number like $350 per child per month going into the college fund, or $16,800 for the two children per year.

The total cost per year for the pair of children is $53,280.

Clothing and other necessities  – $3,600 per year

We will assume that the cost of kid’s clothing is covered in the previous section. But the adults need clothing, and then a lot of other necessities:

  • Toilet paper
  • Deodorant
  • Tooth stuff
  • Shaving stuff
  • Soap
  • Shampoo
  • Haircuts
  • Detergent
  • Cleaning supplies
  • Furnace filters
  • Birthday and Christmas presents
  • The occasional splurge, for example a movie or a book

If we lump clothing and shoes and all these other items together, what is the monthly cost? I am going to guesstimate it at $150 per month per adult, or $3,600 total per year.

Vacation time – $12,000 per year

A middle-class family should get to go on vacation. Let’s assume two week-long family vacations per year at a cost of $6,000 per week.

Healthcare – $12,000 per year

Healthcare costs include the cost of health insurance plus co-pays plus deductibles plus dental visits plus prescriptions and maybe a few other things. For this estimate let’s go with a round number of $1,000 per month, on the assumption that the employer will cover some of the costs.

Retirement Savings – $24,000 per year

Everyone should be saving for retirement. According to this article:

“It’s the million-dollar question — quite literally: How much should I save for retirement? There is a general rule of thumb: When saving for retirement, most experts recommend an annual retirement savings goal of 10% to 15% of your pre-tax income.”

We will assume that each adult is saving $1,000 per month, or a total of $24,000 per year.

Adding it all up – $194,380 per year

Now let’s add it all up. What does it cost a typical family of four to live a middle-class lifestyle in America today?

  • House – $51,000 per year
  • Utilities – $6,500 per year
  • Cars – $24,000 per year
  • Children – $51,280 per year
  • Food – $10,000 per year
  • Clothing and other – $3,600 per year
  • Vacation – $12,000 per year
  • Healthcare – $12,000 per year
  • Retirement savings – $24,000 per year

The total is $194,380.

Since the original number for income is $233,000, the number $194,380 at first glance seems fine. But we have not accounted for income taxes:

  • Federal income taxes
  • Social security taxes
  • Medicare taxes
  • State income taxes

It depends on the state, but all of these taxes together might total up to about 30%.

Therefore, $233,000 with a 30% tax reduction means total income taxes of $70,000 and a take home pay of only $163,000.

We are short by $31,000 per year!

This is impossible to believe, but even if a middle-class family of four makes $233,000 per year, they cannot live a middle-class lifestyle in America today.

This family could not even live paycheck-to-paycheck. This family would be running a $31,000 deficit every year.

And keep in mind:

  • This is a completely normal house in Raleigh, NC
  • We bought cars that are completely average
  • We are not spending excessively on the kids – these are the average, normal kid expenses
  • There is nothing extravagant here – no swimming pool, no “toys” like boats or snowmobiles, no vacation homes, nothing mentioned about hobbies or musical instruments or pets or savings accounts or emergency funds or anything else.

This is a completely ordinary middle-class life, and all-in it costs nearly $200,000 to live it.

You can see why the people surveyed at the beginning of this article arrived at a number like $233,000 in annual income. And even this number is not enough.

Very few families in America today are making $233,000 per year. Only 3% of Amrican households make this amount or more. As mentioned above, today’s median household income is only $71,000. If we do not have $194,000 in after-tax money to spend, then how might American families get by?

  • The first thing to eliminate would be the college fund. This saves $16,800 per year.
  • Then we would lose the retirement fund, saving $24,000 per year.
  • Then we would lose one of the vacations and save $6,000 per year.
  • We would drive used cars rather than average new cars and hope to cut car expenses in half, saving $12,000 per year.

These reductions save $58,800 per year. The total cost now is “only” $135,580 needed per year. Adding $41,000 to cover income taxes, a middle-class family “only” needs to make $177,000 per year after making these rather drastic compromises. And very few families are making $177,000 per year – this number is a pipe dream for most American families.

Now we can understand why so many Americans are gnashing their teeth about the cost of living crisis in America. It now makes total sense when we hear people say:

  • “There is no way we can afford to have children”
  • “We are saving zero dollars for retirement”
  • “We can’t eat our anymore, there is no way we can afford it”
  • “If the kids go to college, it will all be on student loans”
  • “Who can afford to buy a new car?”
  • “The cost of housing is completely out of control”
  • “We are living paycheck-to-paycheck, we have zero savings, and we are barely scraping by”

The American Dream is being destroyed before our very eyes. Nothing short of a complete revamping of current trends will fix this. Wages must rise significantly. Housing prices must fall significantly via a massive construction effort. Inequality and the concentration of wealth must be reversed.

Let me close with this video, which is a classic that explains how badly skewed the concentration of wealth has become in America: https://www.youtube.com/watch?v=QPKKQnijnsM


  1. Americans think they need to earn $233,000 to live comfortably, and twice that to be rich – https://fortune.com/2023/07/09/how-americans-define-wealth-financial-comfort/
  2. Survey: The average American feels they’d need over $200K a year to be financially comfortable – https://www.bankrate.com/personal-finance/financial-freedom-survey/
  3. Here’s the salary Americans say they need to feel financially secure – https://www.cnbc.com/2023/07/09/salary-americans-need-to-feel-financially-secure.html
  4. Americans say they need to make $233,000 to feel financially secure, but their average salary is $75,000 – https://www.marketwatch.com/story/the-stunning-gap-between-how-much-americans-earn-and-how-much-they-need-to-feel-financially-secure-cfbea667
  5. https://www.youtube.com/watch?v=bStWh7WhctE – Harvard study says annual household income of $181,000 needed to purchase median-priced Mass. Home
  6. https://www.bls.gov/data/inflation_calculator.htm
  7. https://www.bankrate.com/mortgages/mortgage-calculator/
  8. https://www.caranddriver.com/news/a43611570/average-new-car-price-down-still-high/
  9. https://finmasters.com/average-car-loan-interest-rates-by-credit-score/
  10. https://www.nerdwallet.com/calculator/auto-loan-calculator
  11. https://www.investopedia.com/terms/m/middle-class.asp
  12. https://www.investopedia.com/articles/pf/10/middle-class.asp
  13. https://www.microsoft.com/en-us/microsoft-365-life-hacks/budgeting/average-cost-groceries-per-month
  14. https://www.investopedia.com/articles/personal-finance/090415/cost-raising-child-america.asp
  15. https://www.bankrate.com/banking/cost-of-vacation
  16. https://www.nerdwallet.com/article/investing/how-much-to-save-for-retirement
  17. https://dqydj.com/income-percentile-calculator/
  18. https://www.youtube.com/watch?v=QPKKQnijnsM – Wealth Inequality in America
  19. https://www.youtube.com/watch?v=wOI8RuhW7q0 – How Wealth Inequality Spiraled Out of Control | Robert Reich