What is Barista FIRE?
Barista FIRE is the point where your investments are big enough that part-time work can cover the rest of your costs. You leave your full-time job, take on lighter work that you enjoy or that fits your life, and draw from your investments to fill the gap between what you earn and what you spend.
FIRE stands for Financial Independence, Retire Early. Full FIRE means having enough invested that you never need to work again. Barista FIRE is a halfway house. You still earn, but you no longer need a full-time salary. The name comes from the idea of working a few shifts a week in a coffee shop. In the US that kind of job can also come with health insurance, which is one reason the idea caught on.
You do not need to make coffee. Barista FIRE can mean three days a week in your old field, freelance work, tutoring, seasonal jobs or running a small business. What matters is the money it brings in each year.
Your Barista FIRE number
Your Barista FIRE number is how much you need invested for this to work. It depends on three amounts and one rate:
- how much you spend each year,
- how much part-time work will pay each year,
- how much a pension will pay each year, if anything,
- and the withdrawal rate: the share of your investments you take out each year.
The sum is simple. Take your spending, subtract your part-time income and your pension, and divide what is left by your withdrawal rate.
Barista FIRE number = (spending − part-time income − pension) ÷ withdrawal rate
For example, a couple who spend $60,000 a year and expect $25,000 a year from part-time work, with no pension yet, need their investments to pay $35,000 a year. At a 4% withdrawal rate that is $35,000 ÷ 0.04 = $875,000.
Compare that with full FIRE. With no part-time income, the same couple would need $60,000 ÷ 0.04 = $1,500,000. Part-time pay of $25,000 a year cuts the amount they need by more than $600,000. That is the whole appeal of Barista FIRE: a modest income does a lot of work.
When you get there
The calculator also shows the age you reach your Barista FIRE number. It starts from what you have invested today and steps forward one year at a time. Each year your investments grow at the real growth rate, and a year of your monthly saving is added. The first age at which your investments are at least your number is your Barista FIRE age.
The real growth rate is growth after inflation:
real rate = (1 + growth) ÷ (1 + inflation) − 1
With 7% growth and 3% inflation that is 1.07 ÷ 1.03 − 1 = 3.88% a year. This is the same rate and the same yearly steps the Coast FIRE calculator uses. Every amount is in today’s money, so $875,000 means $875,000 of today’s spending power.
Take a couple aged 30 with $150,000 invested who add $1,200 a month. They reach $875,000 at 53. Saving $2,000 a month brings that forward to 48. Expecting $35,000 a year from part-time work instead of $25,000 lowers their number to $625,000, which they reach at 48 as well. Expecting only $15,000 raises it to $1,125,000 and pushes the age to 58.
These three changes show the levers you have: how much you save now, how much part-time work you are willing to do later, and how much you spend.
How to use this calculator
- Choose your country. This sets your currency, how numbers are written, a default inflation rate and the name of your state pension. Taxes are not calculated for any country yet.
- Choose Just me or Couple. For a couple, enter money as household totals.
- Enter what you have invested and what you add each month. Include retirement accounts, index funds and other long-term investments. Leave out your home and your emergency fund.
- Enter what you will spend each year once you switch to part-time work, in today’s money.
- Enter your part-time income per year. Use what you expect to earn after you cut back, not what you earn now.
- Enter any pension income per year. If it will not start until later, see the note below.
The answer updates as you type. Every step of the maths is shown under “How we calculated this”, filled in with your own numbers. To change growth, inflation or the withdrawal rate, press Change.
If you have already saved a plan on the Coast FIRE calculator, this page fills in your country, ages, savings and assumptions from it, so you only need to add your part-time income.
Things to think about
Part-time income is not guaranteed. Jobs change, health changes and some fields are hard to work in part-time. Enter a figure you are confident about, and look at what happens to your number if it is lower.
Pensions often start later. If your state or work pension starts years after you go part-time, your investments must cover that gap on their own. This calculator does not yet split your life into before and after the pension starts. To stay on the safe side, enter 0 for the pension, as in the example above, and treat any pension as a bonus that lowers your withdrawals later.
Taxes and fees are not included. Part-time income is usually taxed, and so are withdrawals from many accounts. Treat the result as a before-tax estimate.
The withdrawal rate matters a lot. The 4% rate comes from US research on 30-year retirements. Barista FIRE can start earlier and last longer, so some people use 3.5% to be safer. At 3.5%, the $35,000 gap in our example needs $1,000,000 instead of $875,000.
Barista FIRE, Coast FIRE and Fat FIRE
These three ideas answer different questions.
- Coast FIRE: when can I stop saving for retirement and let growth do the rest, while I keep working to pay my bills? Try the Coast FIRE calculator.
- Barista FIRE: when can I leave full-time work and live on part-time pay plus my investments?
- Fat FIRE: how much do I need to stop work completely on a generous budget? Try the Fat FIRE calculator.
Many people pass through more than one. You might reach Coast FIRE in your thirties, keep working full-time for a few more years to build a cushion, then switch to part-time work once you reach your Barista FIRE number.