Escape velocity is the speed needed to "break free" from the gravitational attraction of a massive body, without further propulsion.
Here, we will be trying to discern the financial escape velocity, or income-producing asset accumulation required to "break free" from poverty without further work, and the time, effort and planning to achieve it.
First we have to define a min/max income at which ones life is sustained, without surplus i.e. the poverty level.
The income required for a family of 4 to sustain themselves (with no surplus) is $27,000 (after tax)
This amount requires a job that pays this amount. But by the definition of financial escape velocity, this wage must be replaced so that no further work (propulsion) is necessary.
So the object is to measure the time it takes to accumulate the assets required to safely produce the exact income required to sustain the lives of said family of 4.
Let us first examine this sustainable income level:
This $27,000 is what is known as the "median" income level, which approximately means 50% make more than this and 50% make less than this amount. But to be statistically conservative, we will assume that that 80% of the population makes this amount. Therefore in real numbers, this family earns $21,600 ($27,000 x 80%).
Also conservatively, lets assume that this family of 4 saves 10% of its income toward this goal of poverty escape velocity (accumulation of assets that safely produce a life-sustaining passive income level). This amount would be $2,376 (where the real 10% is $2,160 is necessarily added to the minimum sustainable income of $21,600 and 10% of that new delimited amount is then derived).
Now we have to arrive at an income-bearing asset amount that will safely produce the life sustaining income without more work. Given the current interest rates (2%) we get the amount of $1,350,000 ($27,000/2%)
So if said family saved $2,376/year at a discount rate of 2%, it would take over 500 years to accumulate the assets required to safely produce the necessary life-sustaining passive income!
So if your a wage slave like most Americans, your descendants can earn their emancipation into the free world of sustainable passive income after 25 generations!
500 years?! Ain't nobody got time for that...there has to be a shortcut!
There are short cuts, but every shortcut has added risk which inherently lengthens the shortcut!
The only shortcut turns out to be the ignorance of your fellow man, which is what wealthy people invest in!
