If you’ve already started looking into FIRE retirement savings strategies, you might be keen to start crunching a few numbers. With my Barista FIRE calculator below, all you need to do is enter a few key stats, and you’ll find out when you can retire and how much you’ll take with you.
I’ll also take you through the basics of Barista FIRE – and consider whether or not it might be the right choice for your retirement goals.
Barista FIRE Calculator
Once you know what Barista FIRE is all about, use the calculator below to work out your key retirement statistics.
For example, fill in your projected retirement age and contributions. Barista FIRE isn’t a perfect savings model for everyone, but if you’re curious, this calculator will help you make up your mind.
Please hit Calculate to proceed.
We’ve updated this calculator with new functionality! Here’s a quick guide to using the calculator and what each input needs.
There are two tabs – Simple and Advanced. As the names suggest, you get a simplified or the full blown version of the calculator.
Let’s go through the inputs for the Simple mode first:
- Currency: Simply choose the currency you intend to save and withdraw in (e.g., USD, GBP, CAD, AUD, EUR, or INR).
- Current Age: Nice and simple – how old are you right now (in years)?
- Retirement Age: The age at which you wish to begin your retirement.
- Current Portfolio Value: Do you already have a portfolio for investments, stocks, shares, or bonds? Be sure to enter your savings amounts here – and only include those amounts you can freely use to invest with.
- Annual Contribution: How much do you save or contribute each year? This must be a figure you know you’ll invest without fail. It’s assumed that these payments are made each year until you retire. If you want a little more control, check out the Advanced tab.
- Annual Return (%): How much do you roughly expect to make from your portfolio each year? I’d recommend entering 6 to 8% if you’re unsure.
- Annual Expense: The amount of money you expect to require in your retirement.
- Supporting Income: How much do you expect to receive from supporting jobs? Enter the amount here. Note that the income tax here is assumed to be 0%. To account for taxes, please use the Advanced tab.
Note that the Simple mode defaults to an inflation rate of 2%. Income taxes are assumed to be 0%.
The Advanced tab features more inputs and more functionality. Here are the key things to know about the inputs on this tab:
- Annual Contribution and Stop Contribution Age: These two inputs work in conjunction here. You can enter a specific age up to which you wish to continue contributing to your portfolio. See the discussion below for more clarification.
- Initial Return (%): This is the return on your portfolio during your wealth build-up phase. Typically people prefer a more aggressive allocation, you could try a higher number like 8% here.
- Retirement Return (%): Once in retirement, people generally skew to a more conservative portfolio, so you can model that using a lower return figure – say 6%.
- Inflation Rate (%): Enter in your country’s current inflation rate if you know it. A good figure for a developed country may be, for example, 2%.
- Stop Contribution Age: At what age do you want to stop paying into your savings or portfolio? This value can be any year between your Current Age and your Retirement Age.
- Annual Expense (Post-tax): In today’s currency terms, how much money will you need in your retirement phase? Don’t worry about inflation – the calculator will take care of this for you! Simply enter in a number based on current inflation rates and your results will be adjusted. Also remember you will very likely have to pay income taxes in your retirement as well, so your withdrawals from the portfolio will actually be higher to account for income taxes.
- Expected Average Income Tax Rate (%): You don’t have to fill this field in – but if you know how much you expect to pay in average income tax on your combined income streams (all your Barista gigs + withdrawals from your portfolio), enter in a number. If you don’t know a number, a low-figure, usually between 10% to 20% will serve as a reasonable placeholder.
The Barista FIRE calculator presents the results in 4 different ways:
- Descriptive: This section just provides a simple text based summary with the basic numbers around whether you’ll be able to achieve Barista FIRE or not, based on the inputs that you have entered.
- Chart 1 – Portfolio Value & Annual Investment Income: The black line shows how your portfolio value (left y-axis) will behave over time. The vertical bars show the annual investment income generated by your portfolio. Note that this income will be a combination of capital gains (share prices going up) and dividends.
- Chart 2 – Annual Cash Flows & Returns: This chart shows the cash added to the portfolio during initial years and the cash withdrawn from the portfolio in the retirement years. These are in orange. The blue bars show the annual investment income from the portfolio.
- Table: If you select “Yes” in the dropdown box, the results will be shown in a tabular format for each year.
This calculator is applicable across the world, so whether you are in the US, UK, Canada, or Australia, this calculator will work for you. Just remember to set your currency format properly so your results are shown in the proper format.
What is Barista FIRE?
Barista FIRE is part of the FIRE movement – Financial Independence, Retire Early. FIRE revolves around you making enough money to quit work before you reach your 60s. A dream for most of us!
The Barista FIRE model works on the principle that you’d use investment money drawings to cover a portion of your annual outgoings, so you can effectively “wind down” work and start making up the difference in a low-stress part-time position, such as a barista. It also brings up the added possibility of being able to travel the world and take up jobs on ad-hoc basis to support your travels, while still having the comfort of a stable and regular base income stream.
Alternatively, you could continue to do side hustle jobs related to your prior full-time career.
If you’ve already looked into FIRE, you might know that there’s such a thing as a FIRE number. This is the amount you’ll need to have saved to be able to retire at the age you wish. For many people, this number is pretty high!
With Barista FIRE, you can start retiring earlier than you might while chasing that FIRE number. Essentially, you’d work full-time and invest money, before drawing passive income once you reach a fraction of your FIRE total.
This fraction won’t cover you entirely to fully retire. However, what it should do is allow you to start slowing down for semi-retirement.
The drawings you make when you reach your Barista FIRE number will cover much of your expenses, while you make up the rest while working a part-time role.
Is Barista FIRE a good idea?
That all depends on your retirement goals. Barista FIRE is great for helping you wind down your workload heading toward retirement, but it does still demand you to keep working.
The benefit of Barista FIRE is that you need to save less for your retirement. Think about this as a rule of thumb, for each $10,000 less that you need in retirement, you can reduce your total portfolio value by $250,000! That is a huge amount.
Take a look at the table below. Using the 4% rule of withdrawal or the 5% rule of withdrawal, you can see how having even a little bit of supporting or supplemental income from a part-time job can reduce the size of your required savings by a massive amount.
|Annual Supplemental Income||Equivalent Savings @ 4%||Equivalent Savings @ 5%|
Obviously, there are some downsides. If you retire early by leaping into Barista FIRE, it could mean you lose access to full-time employment perks such as health insurance. You’ll now need to fund medical care yourself, which might get costly as you age. You’ll have to plan for this in your annual expenditures.
That said, for the right person itching to get into FIRE (and who may not anticipate reaching their full number), the Barista model helps you break free from the working cycle earlier. In my personal opinion it’s probably best for people who plan to retire earlier.
If you plan to retire in your 60s with Barista FIRE as your plan, I would caution you against it. While this model requires you to save less up front, it does mean you have to be in a condition – both physical and mental – where you are willing to work indefinitely. If you therefore plan to retire in the latter stage of your life, you have to seriously evaluate whether you have will the physical ability or simply the willingness/patience to look for work and show up to it on a regular basis.
Barista FIRE Number
So wondering, how much do I need to save for Barista FIRE? As you may imagine, the specific circumstances will really vary from person-to-person and family-to-family.
If we take some specific examples, let’s say that Olivia and her partner plan to retire in 10 years with Barista FIRE as the goal. If they determine that their annual spending requirements will be a minimum of $65,000, it likely makes sense to shoot for a target that is within 70-80% of that number. This means that their portfolio should throw off at least $46,000 to $52,000 per year. To make up the balance of $19,000 to $13,000, the two will have to work part-time. Depending on where they choose to live and work, and their roles, they could likely meet this minimum goal. Of course for additional cash, they will have to work more.
Based on the 4% rule, they would need to save up anywhere from $1.1 million to $1.3 million dollars. If you stretch and go with the 5% rule, their required savings would be $920k to $1.04 million. That’s obviously a big difference, but then you’re drawing more heavily from the portfolio and leaving less room for years with poor returns.
On the flip side though, the extra income they generate through working in retirement will then reduce the need to save anywhere from $300k to $500k. That is a HUGE amount and could possibly mean an avoided decade or more of working full-time.
Comparing types of FIRE
There are many different variations of the FIRE movement, so let’s compare a few of them.
Barista FIRE vs Coast FIRE
Coast FIRE is almost the inverse of Barista FIRE. We’ve covered it in greater detail in our linked article, so I won’t get in to the specifics, but it’s funny how the two different philosophies get to a similar end-goal, but in different ways.
In a nutshell, in Coast FIRE, you save lots of money early in your life and then let it compound over time until it gets to a meaningful amount that you can retire with your desired lifestyle. Until that point, you do work, but you’re not hyper-focused on saving or investing additional amounts of money as you let your portfolio grow over time.
See the difference?
Bringing it all together, the primary difference between Barista FIRE and Coast FIRE lies in the employment expectations and retirement savings. Barista FIRE individuals continue part-time work to cover current expenses, having saved enough for their future needs. Coast FIRE individuals, meanwhile, have already put enough into savings that they’ll have a comfortable retirement even without further contributions; they just need to cover their current expenses.
Choosing between Barista FIRE and Coast FIRE often comes down to individual circumstances, including financial situation, career satisfaction, and personal lifestyle choices. Both strategies offer a balance between work and leisure, providing opportunities for a semi-retired lifestyle before reaching the traditional retirement age.
Barista FIRE vs Fat FIRE
Fat FIRE refers to retiring early with a larger financial cushion. This strategy targets a retirement lifestyle that is at the same level or higher than the individual’s pre-retirement lifestyle, including luxuries such as travel, fine dining, and expensive hobbies.
The fundamental difference between Barista FIRE and Fat FIRE comes down to lifestyle and work expectations in retirement. Barista FIRE allows for early retirement from full-time work, but it includes part-time work to cover daily expenses. The quality of life with Barista FIRE is often less luxurious, as it emphasizes financial freedom over material affluence.
Fat FIRE, meanwhile, seeks to provide a retirement lifestyle equal to or better than one’s working life. It requires more capital and longer periods of high-income work, saving, and investment. The goal of Fat FIRE is to enjoy the luxuries of life without needing to work in retirement.
As you can see, there’s a substantial difference between these two flavours of FIRE, and in my mind, I don’t see them as being compatible with each other. Both have different goals and pathways needed and will likely work for different types/personalities of people.
The one benefit of Fat FIRE though is that if you choose to go on that pathway and save towards that goal, you will reach a threshold where you could easily support the Barista lifestyle, should you so choose. After this threshold you could easily decide to retire early to become a Barista or just keep working along towards your goal of a luxurious life.
Having the comfort in the back of your mind that you could choose to hop off the career and work-train any time you want, or not having to worry about losing your job or quitting your job, can be worth a lot!
Lean FIRE vs Barista FIRE
Lean FIRE refers to achieving financial independence and retiring early while maintaining a minimalist, frugal lifestyle both in the saving phase and during retirement. The focus of Lean FIRE is less on the amount saved and more on reducing living costs to the absolute minimum required for a simple lifestyle.
Those who pursue Lean FIRE often have lower income levels, or they may simply prefer a minimalist lifestyle. They focus on reducing expenses in all areas, including housing, transportation, food, and entertainment, and are usually comfortable with a no-frills, low-cost lifestyle even in retirement.
While both Lean FIRE and Barista FIRE strategies aim for financial independence and early retirement, they have different approaches. Lean FIRE requires a more frugal lifestyle and is more focused on cutting expenses to the bone both pre- and post-retirement. It can be a good choice for people who can live happily on less and find satisfaction in a minimalist lifestyle.
Barista FIRE, meanwhile, offers a bit more flexibility and is less about extreme frugality and more about balancing work and leisure. This path may be more appealing to those who don’t want to live as frugally as required by Lean FIRE, but still wish to leave the traditional 9-to-5 work schedule.
The decision between Lean FIRE and Barista FIRE ultimately depends on your personal goals, lifestyle preferences, and your attitude towards work and retirement.
Before You Go…
Hopefully you found this information useful. Please do let me know in the comments if you have any feedback, comments, or questions!
Our whole blog is dedicated to help you get on the path of financial freedom. Feel free to browse around and read through the articles.
In a nutshell, the fastest way to achieving FIRE is to cut your debt, minimize unnecessary expenses, so you can save and invest your money! Do check out our guide to vested balances and 401Ks, should you choose to go that route!