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Getting Rich: You Have a One in Nine Chance of Making It to the Top 1%. If You're White, That Is.

The bad news? Research out of Washington University in St. Louis shows you'll only stay in the top 1% of earners for a year or so.

According to new research, there's a 1 in 9 chance that the typical American (you) will hit the jackpot and join the wealthiest 1 percent for at least one year in her or his working life.
  • Only an elite few get to stay in that economic stratosphere -- and 
  • nonwhite workers remain among those who face far longer odds.
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This, according to Mark Rank, PhD, the Herbert S. Hadley Professor of Social Welfare at the Brown School and co-author of the influential book 'Chasing the American Dream: Understanding What Shapes Our Fortunes.'

According to the authors, "Education, marriage and race are among the strongest predictors of top-level income, and in particular the race effect suggests persistent patterns of social inequality."

Relying on data collected regularly since 1968 as part of the University of Michigan's Panel Study of Income Dynamics, this life-course approach analyzed thousands of people from ages 25-60, and examined long stretches of their work lives to track economic movement.

This large-scale, long-term observation provided some surprising results:
  • By age 60, almost 70 percent of the working population will experience at least one year in the top 20 percent of income earners.
  • More than half (53 percent) will have at least one year among the top 10 percent.
  • Slightly more than 11 percent or one in nine will spend at least one year as members of the top 1 percent of income earners.
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While Rank and Hirschl found substantial fluidity among the ranks of America's wealthiest, they also noticed that very few get to stay among the ranks of the super rich for very long.

While 70 percent of the working population may hit the top 20 percent of earners, barely 20 percent will stay for 10 consecutive years or more. At the very top, while 1 in 9 Americans may at some time in their careers be among the top 1 percent, fewer than one in 160 (0.6 percent) will stay for a decade or more.

"Attaining 10 consecutive years at the top is rare, and reflects the idea that only a few persist at this elite level," the authors write. They also found this higher-than-expected fluidity to be a double-edged sword -- while it demonstrates relatively widespread opportunity for top-level income, it also creates a very real insecurity among those who reach those heights.

Lastly, Rank and Hirschl uncovered another "contentious social implication" in their research: When looking at demographic patterns among the people whose data was analyzed,
  • being educated, 
  • being married and 
  • being white are among the strongest predictors of reaching the economic peak.
"It would be misguided to presume that top-level income attainment is solely a function of hard work, diligence and equality of opportunity," they write. "A more nuanced interpretation includes the proposition that access to top-level income is influenced by historic patterns of race and class inequality."

If you have a chance to make the top 1% of incomes during your working life, but can expect to remain there but a year, this clearly indicates you have a strategy in mind to put this wealth aside inside some sort of investment where your good fortune can work for you for the long term.

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Story Source: materials provided by Washington University in St. Louis. Thomas A. Hirschl, Mark R. Rank. The Life Course Dynamics of Affluence. PLOS ONE, 2015.

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