The truth about wealth is that great wealth often comes with great volatility:
Despite heated rhetoric emanating from politicians and pundits, the top 1% is hardly a fixed group that enjoys consistent income gains. To the contrary, the wealthiest have become the most crash-prone group in our economy.
The total income of the top 1% — or those earning more than $343,000 in 2009 — fell by more than 30% from 2007, according to the most recent Internal Revenue Service data. By contrast, the average income of the bottom 90% fell less than 3% during the same period.
A November Federal Reserve study, meanwhile, found that a third of the people in the top 1% in 2007, as measured by wealth, were no longer in the top 1% in 2009.
Only 15% of the Forbes 400 stayed on the list over a 21-year period, according to a study that cited these five reasons for dropping off the list:
- Overconcentration
- Leverage
- Spending
- The “toxic cocktail” [of those first three reasons combined]
- Family issues
(Hat tip to Kent.)