Retirement · Barista FIRE
Barista FIRE calculator.
Barista FIRE means semi-retirement: part-time income covers some spending and the portfolio covers the rest. See your smaller target and how much sooner you reach it.
Barista number = (yearly spending − part-time income after tax) ÷ withdrawal rate. Spending $40,000 with $15,000 of part-time income at 4% needs $625,000 instead of $1,000,000, which is 37.5% less.
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How the Barista FIRE number works
Wikipedia describes BaristaFIRE as semi-retirement supported by part-time or lower-stress work, where day-to-day expenses are covered by a mix of employment income and modest portfolio withdrawals. The arithmetic is the 25x rule applied only to the part of your spending that work does not cover: the portfolio must support the gap, so the target is the gap divided by your withdrawal rate.
Worked example. Spending $40,000 a year with $15,000 of after-tax part-time income leaves a $25,000 gap. At a 4% withdrawal rate the Barista number is 25,000 ÷ 0.04 = $625,000, against $1,000,000 for full financial independence, a saving of $375,000 (37.5%). Starting with $100,000 and adding $20,000 a year at 5% real return, you reach $625,000 in 14.7 years and $1,000,000 in 21.1 years, so the part-time route is 6.4 years sooner.
Check the part-time job’s hours and benefits. Wikipedia notes that BaristaFIRE is often discussed in the US because part-time work with an employer can provide health insurance; the early-retirement healthcare bridge tool prices that cost if you would have to cover it yourself.
Frequently asked questions
What is Barista FIRE?
A form of semi-retirement where part-time income covers part of your living costs and your investments cover the rest, so you need a smaller portfolio than full FIRE.
Should part-time income be before or after tax?
After tax, because your spending is paid from take-home money. If you enter pre-tax income the portfolio target will be too low.
Does the part-time income have to last forever?
The formula assumes it continues for as long as you rely on it. If you plan to stop at some age, the portfolio then has to carry the full spending, so check that number too.
Does this include taxes on withdrawals?
No. Enter spending and income on the same after-tax basis and treat the result as a rough target, not a tax plan.
Sources
Checked
- Wikipedia: FIRE movement
- Mr. Money Mustache: The Shockingly Simple Math Behind Early Retirement (13 January 2012)
Runs entirely in your browser. Nothing you type is sent or stored. Formulas are standard arithmetic; assumptions such as returns are yours to set.
Not advice
Illustration only. Part-time income, returns and spending change. Not financial, tax or investment advice.