Earning 6 figures isn't enough to buy the American Dream anymore

• A $100,000 salary, now middle class, is no longer enough to buy the symbols of the American Dream.
• A house, an education, and kids have all become way more expensive, exceeding income increases.

A $100,000 salary has long been the gold standard of success. But in today's economy, it's not enough to buy the American Dream.

It's a dream that millions have chased for decades, seeking the postwar ideal that emerged in the 1950s: getting an education, landing a good job, and starting a family, with a nice house in the suburbs.

But 70 years later, America's middle class is shrinking thanks to an increasing cost of living for everything from college tuition to healthcare. Income increases simply have not kept up with the exponential increase in living costs, and the pandemic has thrown job loss and pay cuts into the mix.

It means the six-figure salary just isn't what it used to be. Buying a house, paying for college, and having kids is barely attainable now, even on $100,000 a year.

There are fewer homes for $100K households

A six-figure salary no longer cuts it for the pinnacle of the American Dream: a house. Home prices have been going up for years, at a steeper rate than they did ahead of the Great Recession. By 2018, first-time buyers were paying 39% more than first-time buyers did at the same age nearly 40 years ago.

The Wall Street Journal reported back in 2019 that an increasing percentage of six-figure earners was renting instead of buying, merely because they couldn't afford a down payment. Today's housing crisis, rife with sky-high prices and a dwindling amount of homes for sale, only exacerbated the situation by sending the median house price to a record high of $386,888 in June.

For comparison's sake, the median house cost $7,354 in 1950 and $11,900 in 1960, according to US Census data. Adjusted for inflation, those come to about $85,000 and $111,000 in 2021 dollars, respectively.

Housing availability and affordability for households earning $100,000 has dropped since 2019, the National Association of Realtors (NAR) reported. Home prices shot up by 13% year-over-year in October while housing inventory fell by 12% in the same time frame.

In October 2019, there were 852,090 homes for sale affordable for a household earning $100,000. Two years later, just 348,800 houses are. That means more than half the houses affordable to a $100,000 earner are off the market.

It doesn't help that bidding wars have become the norm, with the wealthiest emerging victorious with all-cash offers. Ashley Nader, a tech product manager who has been unsuccessfully house hunting for a year, previously told Insider that she had to up her housing budget from $400,000 to $600,000. "It's really a cash buyer market," she said. "If you have the cash, you can buy whatever you want right now."

Even six-figure salaries aren't enough for college

In the postwar paradigm, a college degree promised a long, stable career with a steady salary that could help buy that house in the 'burbs. Instead, education has become the reason why many Americans can't afford to buy a home.

The annual cost of a four-year undergraduate degree, including room and board at a private institution, was $28,000 for the 1991-1992 school year, adjusted for inflation, per the College Board. At a public school, the same degree cost $10,760 annually. Those annual costs were $51,690 and $22,690, respectively, for the 2021-2022 school year.

Those soaring prices have left the average American college graduate owing $32,000 in student debt today. The "advantage of a degree today is less than it was 10 years ago, because of the rising cost," Richard Vedder, an author and distinguished professor emeritus of economics at Ohio University, previously told Insider. "The return on investment has fallen."

Student debt has made it so that some professions are no longer the path to wealth they once were. While dentists, doctors, and lawyers make six-figure salaries, many have student debt that outweighs their income.

Even high earners without professional degrees struggle to balance their income with their student debt. One tech worker making over $120,000 in the Bay Area previously told Insider he was paying $2,500 in student loans a month. In California, after taxes, that was nearly half of his take-home pay. He ended up moving to Phoenix during the pandemic for its lower cost of living.

Childcare costs are leaving high earners broke

Behind that white picket fence are typically two kids playing with a dog in the yard. But having one child — let alone two — has become a huge financial deterrent for many adults considering parenthood.

A Centers for Disease Control and Prevention report from earlier this year found that the US birth rate fell by 4% from 2019 to 2020, the sharpest single-year decline in almost 50 years, and the lowest number of births since 1979. Recessions typically have the strongest economic influence on birth and fertility rates and millennials, in prime household formation age, lived through two of those before they turned 40.

Money is a big reason why many millennials, who have long been facing an affordability crisis, have put off having kids . It's just become more difficult to shell out the $233,610 it costs to raise a child to age 18 in the US.

Irina Gonzalez recently wrote for Parents that student debt and daycare are keeping her and her husband "broke," despite earning nearly $150,000 between the two of them. "This is the current state of the American Dream for so many millennial parents — stuck between a rock and a hard place as we deal with our own debt and rising childcare costs while living paycheck to paycheck."

The American Dream has unraveled

Now, a six-figure salary is quite the range. A worker earning $100,000 annually probably has a more difficult time affording things like a house than someone raking in $900,000 a year. It would be unfair to generalize that the American Dream is out of reach for the entire six-figure club.

The American Dream also wasn't always attainable for everyone. Larry Samuel, author of "The American Dream: A Cultural History,"previously told Insider that while it used to be relatively easy for white citizens to realize that version of the American Dream, the country's dark legacy of segregation locked out Black Americans and other people of color from it.

And the dream continues to remain out of reach: 40% of high earners feel like they're living paycheck to paycheck, particularly 60% of high-earning millennials.

Life became more expensive after the Great Recession and even more so due to pandemic-related inflation and shortages of goods, services, and workers.

Boxed out of this postwar narrative, six-figure earners are left to create a new version of the American Dream.