As college tuition, health care and other costs rise, the American Dream might seem like an unrealistic fantasy—but it may be more attainable than you think.
The number of Americans who will join the top 2% of earners has doubled in the past 35 years, according to new research featured in the book Chasing the American Dream. By age 60, more than 1 in 5 Americans will have experienced at least one year earning over $250,000 in annual household income. 77% of Americans—mainly educated individuals, working married couples, and aging workers—will have brought in at least $100,000 of household income for at least one year.
These income spikes are usually the result of a particular event, like a year-end bonus, a spouse going back to work, or a promotion. But few of these “new rich” will stay that way for long. In fact, of those who do enter the top 2% of earners, fewer than 5% will remain in this high income bracket for five or more years. A downward turn, such as a medical emergency, divorce or job loss, is often enough to undercut any increase.
Interestingly, even a brief uptick in income often predicts significant changes in people’s behavior. It may cause increased consumption and changes in political opinion—for example, many become more fiscally conservative, yet socially liberal. They believe income, rather than wealth, will enable them to maintain their higher social status.
Research also suggests that these shifts in perspective don’t necessarily disappear after a year of heightened income. A brief taste of the American Dream motivates many to continue having faith even after their salaries fall slightly, and they become part of the “mass affluent” (households making more than $75,000 annually).
A recent Gallup poll found that 60% of those with an annual household income above $90,000 believe that Americans generally have “plenty of opportunity” to find success, compared to 48% of those earning less than $48,000.