(MONEY Magazine) – A generation or so ago, when everyone liked Ike and loved Lucy, the family's lone TV and the American dream came in simple black and white. A house was central to the dream, but central air wasn't. A basic, 800-square-foot, $8,000 Levittown Abox with a carport was heaven. Come summer, the family piled into its Ford country wagon (with imitation wood-panel doors) and tooled off to Lake Watchamasakee for a couple of weeks. In September the proudest wish of all came true: Johnny boarded a Greyhound for State U. after working that summer to pay his tuition. By the 1980s, the dream had gone yupscale. Home had become a 6,000-square- foot contemporary on three acres or a gutted and rehabbed townhouse in a gentrified ghetto. The rented cabin on the lake gave way to a second home high on an ocean dune. And you hoped to get there in a $40,000 Range Rover with four-wheel drive, a power sunroof and an AM-FM cassette tape deck. Finally, in this updated version of the dream, your Tiffany, evenly tanned from a summer at the beach, jets off to Harvard. Clearly, the American dreamers of three decades ago reached and surpassed their goals. The past 20 years of progress came with hidden costs, however. To acquire more and better of everything, just about everybody gave up free time and amassed a mountain of debt. What's more, while many made such sacrifices, not all reaped the rewards. Nonetheless, as a recent MONEY poll suggests, Americans in the '90s are still dreaming. And their dream seems to be shifting back to its more traditional, less materialistic moorings. In the past two decades, much of the stuff of dreams was purchased with the paychecks of hard-working women. In 1989, 74% of women ages 25 to 54 were in the labor force compared with 49% in 1969. While many wanted careers for reasons of self-fulfillment, most knew they were trading off time and home life. In the process, families produced fewer mouths to feed -- the average family with kids under 18 has 1.8 youngsters vs. 2.3 kids two decades ago. Yet the impulse to spend more -- largely on conveniences like eating out and high-tech appliances -- grew quickly out of the two-paycheck life style. More begat more. Consumer credit became an addiction. Total consumer installment debt rose from $97.1 billion in 1969 to $716.6 billion in 1989. Even with the rise of the two-paycheck household, aggregate statistics for the most recent decade show little overall income growth. After adjusting for inflation's bite, the median income of U.S. families rose from $32,821 in 1979 to just $34,213 last year -- an increase of only 0.4% a year or roughly one- fifth the gain that families achieved every year in the '60s. That's the big picture. But breaking it down reveals two separate images -- one bright and promising, the other dark and potentially threatening. The '80s drove a wedge deep into the midsection of the middle class. As the industrial age waned, that ticket to the middle class, the $15- to $20-an-hour blue-collar manufacturing job, became scarce. Foreign competition forced U.S. corporations to economize, and out went much of that other great pool of prosperity, middle management. Meanwhile, the well educated and highly trained thrived, some fantastically. According to the Economic Policy Institute in Washington, D.C., the average inflation-adjusted income of the most affluent 20% of all families jumped 29% from $81,589 to $105,209 between 1980 and 1990 -- four times the 7% increase from $41,957 to $44,908 for the 20% of families just below them and 13 times the 2.3% rise from $30,268 to $30,964 for the 20% of families below that. The lowest two-fifths fared worst: up slightly from $19,237 to $19,348, and down from $8,082 to $7,725. That breakdown, however, doesn't capture the real flavor of what has been happening to people, since it fails to track them as they move, with age and experience, from one income level to the next. Moreover, each person follows an individual path, which rises or sinks depending on his or her own skill and luck. To help define the American dream more concretely, MONEY commissioned the Gallup Organization in September to ask a randomly chosen sample of 300 subscribers for their vision of the dream. Details of the poll's findings are shown in the tables on these pages. The margin of error is plus or minus 5.8 percentage points. The poll leads to three broad conclusions about MONEY subscribers and many other affluent Americans like them: -- They believe in progress. Respondents say they live better than their parents did at the same age and expect even more for their children. -- They embrace traditional values. They rank a happy home life above all other components of the American dream. -- They are inconspicuous consumers. The average amount they think a family of four needs to live well is an unMilkenlike $58,000. Moreover, the achievers among them tend to have two notable characteristics in common. Most respondents who believe they have already attained their version of the dream had graduated from college (the established route to financial success) and were part of a two-income household (the new route). The poll also identified seven underlying aspirations. In the rest of this article, MONEY examines these seven areas to determine how close we have come to realizing the American dream over the past three decades and how likely we are to achieve it in the future. And each of the seven stories that follow this one offers more specific advice on meeting the basic goals.

1 REWARDING WORK As high-paying blue-collar and middle-management positions disappeared, they were replaced mostly by service-industry jobs with fewer benefits and lower wages. The two lowest-paying industries -- retail trade and services -- accounted for 77% of the 18.8 million jobs created over the past 10 years. But as low-end wages stagnated or fell, ''the earnings of college-educated workers and professionals did grow,'' says Lawrence Mishel, research director at the Economic Policy Institute and co-author of the 1990 report The State of Working America. The inflation-adjusted median income of male college grads, for example, rose more than 5% between 1979 and 1989, from $35,699 to $37,553, according to the U.S. Census Bureau. ''The income polarization we saw in the 1980s was really because of the polarization of jobs,'' says A. Gary Shilling, an economist and investment adviser in New York City. And it will intensify in the '90s. More than half the new jobs created over the next decade will require at least some education beyond high school, and roughly a third of the total will go to college graduates. In addition, the number of jobs in fields requiring the most higher education -- lawyers, electrical engineers, medical researchers, for example -- will increase at twice the nearly 15% rate for all occupations. ''If anything, a recession will accelerate this trend,'' says William Johnston, an economist at the Hudson Institute, a research organization, and co-author of the report Workforce 2000. ''During the last recession, it was the low-skill and manufacturing jobs that took the severest hit.'' As this job pool shrinks, the undereducated will have to settle for lower wages. Understandably, this gap does not undermine the confidence in the future of % respondents to MONEY's poll, whose average family income of $69,000 puts them in the top bracket. Nearly two-fifths think their children will be better off than they are when the kids reach their age, and an equal number believe the kids will do about as well; only a fifth think the younger folks will fare worse. And almost 80% see as much or more opportunity in America today as when their parents were as old as they are now.

2 FIRST-RATE EDUCATION FORYOUR KIDS After a happy home life, this emerged as the top aspiration among respondents to MONEY's poll. And small wonder, since most have undoubtedly come to see the intimate connection between high-quality education and finding a job with a real future. But the poll also reveals the fear that obtaining a college degree for your kids could wreck your own dream of a comfortable retirement. Some 80% of respondents below the age of 40 -- those most likely to be facing college expenses during the 1990s -- are at least somewhat worried that rising college costs could stand in the way of achieving this aspect of the American dream. Their concern is well founded. Over the past 10 years, while incomes have barely kept ahead of inflation, the cost of tuition, room and board at public colleges increased at a rate more than two percentage points higher than the consumer price index. At private colleges, the rate of increase was four percentage points above the CPI. The result can be ridiculously cruel. For example, the Economic Policy Institute calculates that a family with a $50,000 after-tax income and a net worth of $75,000 must come up with $15,736 of the $20,210 in total costs at Stanford University this year. (The rest is made up in grants or loans.) Next year, of course, the tab will be even higher. The competition for a shrinking number of high school grads may rein in costs a bit. But Arthur Hauptman, a higher-education consultant and author of The College Tuition Spiral (Macmillan, $12.95), estimates that if inflation continues at 5%, college fees will beat it by two percentage points annually or so in the coming years. That will put the total Stanford tab at $39,756 in the year 2000. Largely because of budget deficits, ''there's not much prospect for real growth in federal student aid,'' says Lawrence E. Gladieux, executive director of the Washington, D.C. office of the College Board, a nonprofit educational association. ''Aid will probably continue to lag college costs in the foreseeable future.'' Yet despite rising costs, higher education proved to be a wise investment in the 1980s. Between 1979 and 1987, the gap in earnings between high school and college-educated men 25 to 34 years old rose from $6,807 to $10,805 after adjusting for inflation. Harvard economist Richard Freeman estimates that over their working lives, 1980s college grads' higher salaries will amount to roughly a 12% annual return on investment -- including education expenses and earnings forgone while attending school -- after inflation. One probable result of tuition inflation: a continued turning away from private schools. ''The appropriate question is not whether to go to college,'' says Frank Levy, an economist at the University of Maryland, ''but which college do you go to -- an expensive private one or a good public college that probably will cost less than half as much.'' As more families agonize over the expenses, Gladieux expects not only that the best public universities will become a more recognized education bargain but that many private colleges will have to pare down their prices or at least reduce the rate of increase. (See the fall 1990 MONEY Guide to America's Best College Buys.)

3 COMPETENT, AFFORDABLE HEALTH CARE This aspiration is linked to the biggest worry clouding the American dream, particularly for those approaching or in retirement. When we asked respondents to the MONEY poll what might stand in the way of achieving their dream, catastrophic illness came out at the top of the list, outranking such fears as recession and natural disaster. That concern doesn't surprise Hal Cohen, senior tax manager in Deloitte & Touche's executive financial counseling group in Morristown, N.J. ''The prospect of catastrophic illness frightens even my most affluent clients,'' says Cohen. ''They know that one major illness could wipe out assets they've taken a lifetime to build.'' The fear of catastrophic illness is only part of the widespread uneasiness about the gathering chaos in health-care economics. The total health-care bill catapulted from $217 billion in 1979 to $540 billion in 1988. By the end of the decade, the U.S. Health Care Financing Administration estimates that costs will rise to $1,529 billion, or 15% of GNP -- nearly three times the percentage in 1960. Of course, while spending on health care has spiraled upward, the level of care, as evidenced by such medical advances as balloon angioplasty and multiple-organ transplants, has improved too. The catch, however, is affording this superior care. As the waves from rising expenses have started to swamp health insurance, businesses are increasingly cutting back or shifting to employees the cost of medical coverage. For example, the percentage of large firms paying the entire premium for full-time employees' family coverage dropped from 46% in 1982 to 34% in 1988. And the average contribution of those employees who did pay part of the premium tripled from $25 a month 10 years ago to $76 today, according to a report by the consulting firm Hay/Huggins. Similarly, deductibles -- the amounts employees must pay before insurance kicks in -- have risen. According to a 1989 survey by A. Foster Higgins, an employee-benefits firm, 43% of all employer-sponsored health insurance plans have an individual deductible of $200 or more, compared with 25% in 1986. Of course, facing higher deductibles or premiums is still vastly preferable to the plight of those full-time workers who simply don't have insurance. According to the Census Bureau, 24% of them -- or 17 million people -- don't have a union- or an employer-provided group health plan, and 33 million people in the U.S. don't have health insurance at all. There's no quick solution on the horizon for the problems of rising health costs. But here are a few clues to what to expect in the near future. If you're retired or will be soon, you'll probably be hit with continued increases in the cost of Medigap policies -- private supplemental insurance designed to cover costs that Medicare doesn't. The best you can do for now is make sure the policy you do buy has guaranteed renewability and premiums that don't go up automatically as you age. No matter how old you are, if you are covered by your employer's health plan, you should expect to bear more of the cost of coverage -- either by sharing a greater portion of the premium or assuming a higher deductible. You will also see more so-called managed-care programs, such as health maintenance organizations. Your employer will assume most if not all the cost of medical coverage, provided that you are treated by a group of pre-approved doctors and hospitals. Under a new AT&T managed-care plan, for example, employees who stick to company-designated doctors pay a $150 deductible, 5% to 10% of the doctor bill and nothing for hospital charges. Stray to your own doctor outside the company network, however, and the deductible rises to $200 and you pay 20% of all doctor and hospital bills. Says Tom Billet, a managing consultant with A. Foster Higgins: ''If you want more freedom of choice, it's going to cost you.''

4 A HOUSEOF YOUR OWN By this most basic of yardsticks, the American dream faded somewhat during the roaring '80s. It was the first decade since the '30s when the percentage of households owning their own homes actually declined -- from a high of 65.6% in 1980 to 64% in 1989. Young families, faced with the dual obstacles of making enough money to qualify for a mortgage plus coming up with enough savings for a down payment, were hardest hit. The percentage of families headed by 25- to 34-year-olds who owned their own houses dropped from 52.3% in 1980 to 45.2% in 1989. Harvard's Joint Center for Housing Studies estimates that 2 million more individuals and families would own their homes today if the ownership rate had remained at its 1980 peak. Most housing experts expect the home ownership rate to regain its lost ground. The current slump in housing prices will help by making homes more affordable. And as baby boomers' incomes grow along with their age and work experience, many families who postponed buying in the 1980s will be able to make the transition from renters to owners in the 1990s. But, says William Apgar, associate director at Harvard's Joint Center for Housing Studies: ''It may take us the entire decade to get back where we were before the decline. The income growth needed to make homes affordable won't happen overnight, and the current low economic growth will slow things down too.'' Homeowners in the '90s shouldn't expect the giddy gains of the '70s, when starter home prices beat inflation by nearly three percentage points a year. But they can count on doing better than in the 1980s, when values actually declined 0.4% a year after inflation. Overall, housing experts believe house values will rise along with inflation or perhaps beat it by a percentage point or so a year. Those who buy in distressed areas that later rebound may do even better.

5 A NEST EGG What are we to think when having enough savings beats out owning your own home as a priority among poll respondents? We're not dealing with a pack of Scrooges. Something else is at work here, and it can be traced to the deep slough of personal debt we slid into during the just-say-spend '80s. Total consumer installment credit climbed from 14.8% of personal disposable income in 1969 to 19.2% in 1989. | You don't have to be a member of the President's Council of Economic Advisers to figure out that as we were running up record levels of debt, our personal saving rate -- savings as a percent of disposable income -- was falling to post-World War II lows. While households in the '50s and '60s routinely tucked away 6% to 8% of their income, the '80s spending binge pushed that rate down as far as 2.9% by 1987. This low level of personal saving not only made the U.S. more dependent on foreign capital to finance our bloated budget deficits -- it also jeopardized the financial security of many families, since savings act as a safety net when an emergency comes along. ''I know it sounds puritanical to say this,'' says economist Shilling, ''but it's an economic fact of life that this level of debt is unsustainable. We've got to start paying it down through saving.''

Fortunately, the saving rate has already begun to bounce back; it hit 5% in the second quarter of 1990. And many economists believe that the rate will continue to climb in the '90s, in large part because people will be forced to save more to pay off debts and make up for lagging home appreciation. And for those with good jobs and rising incomes, saving will become easier because there will be that much more left over after paying for necessities. Shilling estimates that while households earning between $30,000 and $40,000 tend to save about 5% of their income, those between $60,000 and $75,000 save more than three times as much, or roughly 16%. Shilling also projects that the percentage of U.S. households earning $60,000 or more, after adjusting for inflation, will increase to 13% by 1995, compared with just 9% in 1985, and that their average income will jump from $131,000 to $149,000. Given the larger number of affluent households and their higher incomes, the saving of this group will likely be high enough to pull the overall saving rate to at least 10% by the year 2000. That infusion of cash into our financial system in turn could help push interest rates to as low as 5%, setting off a huge rally in stocks and bonds.

6 OCCASIONALINDULGENCES If Shilling's scenario materializes, the now-and-then splurge can easily come out of your new savings. What a change that would be from the '80s. ''There was a reckless, speculative quality to spending in the past decade,'' says Frederick Elkind, vice president at TrendSights, a division of the advertising firm Ogilvy & Mather. ''The joy of buying replaced the joy of having.'' Observers of consumer buying habits like Elkind do see a basic shift in how we will indulge ourselves. The '90s will see the debut of what he calls ''investment spending'' -- that is, an emphasis on buying things we will enjoy for a long time. As baby boomers slouch into middle age, the house is likely to become more of a focal point for socializing. Combine that trend with flatter real estate prices, which will lead to lower turnover in houses. Result: homeowners are likely to spend more cash renovating their homes. The shift to long-term spending goes beyond buying mere things. In the coming decade, Elkind expects a surge in all types of travel as an aging population decides to catch up on experiences rather than on material acquisitions. Family travel will become especially popular. ''A family trip, whether it's to a theme park or abroad to explore your roots, is a way for two-income families to spend time with their children,'' says Elkind. ''Parents will see these trips not so much as vacations but as an investment in their relationship with their kids.'' Such spending could be one of the best uses for a dollar. In MONEY's poll, the most negative note sounded by all of our respondents came when they were asked to compare America today with the way they remembered life back when they were young. More than half noted a decline in family relationships and only a quarter found them improved.

7 A COMFORTABLERETIREMENT Not surprisingly, 72% of MONEY poll participants feel that a comfortable retirement is crucial to fulfilling the American dream. What is surprising, though, is that a wish so typical of the middle-aged scored so high among our youngest respondents: 75% of those under age 40 consider living well in retirement extremely or very important vs. 71% for those over age 55. Maybe the reason for this oddity is that older Americans have either achieved an easeful retirement already or are close enough to take it for granted. Says Richard Michel, an economist at the Urban Institute in Washington, D.C.: ''The parents of the baby boomers just hit everything right. In terms of economic achievement, they've simply been blessed.'' They launched their careers in the economic Wonder Years of the '50s and '60s when the U.S. was an undisputed giant towering over the war-ravaged economies of Europe and Japan. That mighty engine was expanding at an annual rate of 3% to 4.5%, vs. 1% to 1.5% now, and family incomes were zipping along at 3% or so. Most of this generation also bought houses in the '50s and '60s, just in time to reap the maximum benefit from the '70s housing boom. And since most homeowners had fixed-rate mortgages, their monthly payments didn't jump when inflation zoomed to double digits in the late 1970s and early 1980s. As a result, the current generation of retirees has been able to leave their jobs earlier than ever before -- only 67% of men ages 55 to 64 were still in the labor force in 1989 compared with 83% in 1969 -- and with far more wealth. Michel estimates that by 1993, the average net worth of households headed by people between the ages of 55 and 64 will hit $330,000 -- or more than twice the inflation-adjusted amount the previous generation had amassed by the same age. Boomers aren't likely to be so lucky. By 1993, those who are currently ages 32 to 41 may have less wealth than their parents did at the same age -- $71,000 vs. $88,000. That's because the boomers' wealth is not growing as quickly as their parents' did in their day, and the slow growth will probably continue. Average annual economic growth expectation for the '90s: only 2%. Such is the standard prognosis for the broad population group. Of course, any number of factors -- like the market booms envisioned by Gary Shilling -- could vastly improve the prospects. Moreover, says Michel: ''I would expect people with college educations and high-paying professional and managerial jobs will do better than their parents. In fact, many of them are already doing just that.''

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: TODAY VS. YESTERDAY To get a reading on the nation's progress from the middle class' point of view, MONEY asked 300 randomly chosen subscribers how they think various features of American life have changed since a genera tion ago. The two that elicited the strongest reaction: opportunities for career advancement (higher) and moral standards (lower).

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: YOU VS. YOUR PARENTS When asked to compare their lot with that of their par ents at the same age, poll respondents felt they were ahead in all but one category. Social problems -- drugs, crime, poverty, illiteracy -- were seen as worse.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: YOU VS. YOUR KIDS Life will be even better for their children than it is for them, respon dents believe -- but not that much better. Overall, however, few seem to be afraid that the next generation will lose ground.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: WHAT MATTERS MOST MONEY poll respondents were asked to rate two dozen elements of the American dream. They are ranked below according to how many respondents said they were very important. The top el ement is something money can't buy -- a happy home life. In deed, in today's busy two-income household, that goal may be harder to attain.

CHART: NOT AVAILABLE CREDIT: PATRICIA BYRNE CAPTION: HOW MUCH IT COSTS MONEY poll respondents say that their vision of the American dream is well within their reach. The chart below shows how much those at various income levels believe the good life costs. On average, they estimate that a family of four needs $58,000 a year. That figure goes up as incomes rise -- but not by much. Some 70% of respondents see the dream as costing the same as or less than their own household incomes.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: DESTROYERS OF THE DREAM MONEY asked poll respondents to rate 17 potential obstacles to their contentment, which are ranked here according to the num ber of respondents who were very worried about each one. War may have nosed out taxes because the Persian Gulf crisis domi nated the news when the poll was taken in September.