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The American Dream is dying. By that, I mean the idea that fortunes can be made by smart, hardworking folks of modest means. Oh, it's still possible -- but it doesn't seem attainable.

It wasn't always this way. During the Internet boom and the housing boom, rising asset prices fueled by cheap money acted as a substitute source of spending power. People barely blinked at the thought of needing $1 million or more for retirement. Americans believed they were wealthier than they actually were, and they spent and borrowed accordingly.

This masked a stark truth: The gap between the rich and poor was growing, to levels not seen since the 1920s. And that gap was getting harder and harder to cross. Wages, which more than doubled between 1947 and 1973, have stagnated. The poverty rate has returned to 50-year highs. A record number of Americans rely on the government to help to feed their families.

Plus, politicians tell us Social Security and Medicare are doomed -- so $1 million for retirement seems a paltry sum, even if we can stay employed until we're 65 or 70.

Image: Anthony Mirhaydari

Anthony Mirhaydari

The only sure way to survive seems to be getting rich, but what's rich? A recent survey of millionaires put the number at $7.5 million, which may sound like lottery money. There is a way there -- and yes, it's very hard.

The lottery economy

A lot of us dream of success based on talent and a lightning strike of luck. That's the classic rags to riches story -- the cornerstone of America's promise to the downtrodden and hardworking. That's why shows like "American Idol" and "Who Wants to be a Millionaire?" have become hits, tickling our fantasies just as Horatio Alger novels did in the late 1800s.

According to research by Anna Cristina d'Addio at the Organisation for Economic Co-operation and Development, the rich world's economic watchdog, the United States is slipping behind in the rankings of "intergenerational earnings elasticity" -- the probability that your children will earn more than you did. The United States is just ahead of Italy and Britain but well behind the likes of Australia, Denmark and Norway.

I believe this gets to the heart of the mixed emotions most have about the economy.

We're an optimistic people: While only 2% of people in a 2003 Gallup poll described themselves as "rich," 31% though it very or somewhat likely that they would be someday. A majority of young Americans believe they'll hit the big time eventually.

This could be one reason we think something is fundamentally wrong with the economy. A majority thinks we're in the midst of a recession or a depression.

But apart from winning the lottery, it's hard to see how we'll get rich.

The $7.5 million question

You can't get there, of course, until you decide exactly what constitutes "rich." It's a relative term.

That Gallup poll found the median definition of rich in the United States was an annual household income of $122,000 -- which is still close to the threshold income for being in the top 10% of households. To be honest though, you're just squeaking by if you make that much in high-cost areas like New York City or San Francisco.

Narrowing the focus to the top 2% of households -- to match the 2% of people that self-identify as rich in the Gallup poll -- puts the income threshold at $360,435, according to an analysis by the Tax Policy Center.

But a newer definition that might work better. Four in 10 millionaires recently surveyed by Fidelity said they still do not feel wealthy but would feel that way with $7.5 million in the bank. I'm sure many would feel that way with a lot less -- and the majority of millionaires in the survey said they started feeling rich at $1.75 million in investible assets. But for the sake of argument, let's call $7.5 million "really rich."

So what would it take to put $7.5 million in the bank?

Earning it in your paycheck

One way would be to climb the corporate ladder, join a high-powered law firm or become a high-traffic private-practice doctor. Of the 160 million households in the country, the Tax Policy Center estimates that some 433,000 earn $1 million or more per year -- just 0.3% of the total. Over a couple of decades, given the cost of fine suits, cars and the like, they might put away the $7.5 million to make them really rich.

Joining this upper echelon of wage earners is more difficult and less likely than most realize. Thomas DiPrete of Columbia University, who has written frequently about income inequality, took a look at the chances of becoming rich by digging into the data from the Panel Study of Income Dynamics, which has been measuring the incomes of American families since 1968. He used a number of thresholds, including a $300,000 limit that is close to the 2% concept described above.

The results were startling, showing that the likelihood that someone will become rich depends very much on where he or she starts. The overall chance that those under 30 will achieve an income of more than $300,000 a year within 30 years is between 2% and 3%. For those starting in the top 25% of household incomes (above $80,000 or so) the chances increase to 12% to 17%.