Many people around the world dream of early retirement and working at their own pace.
It is called FIRE, or “financial freedom and early retirement”. This concept has gained traction as more people are becoming interested in their finances and dissociating themselves from the “9-5” normality of life.
Many people dismiss the idea of retiring early because they believe it is impossible.
To withdraw 4% of your savings safely, you’ll need to save 25x the annual expenses. You want to make sure you don’t deplete your investment.
You will also have to consider your health insurance, which is another factor to consider when you are considering retiring early.
Over the years, many people have retired early and without generational wealth. They may not even have a six-figure salary. Barista FIRE is one of the many FIRE variations available.
Table of Contents
What is Barista Fire?
What is Barista Fire?
Barista FIRE Example
Barista FIRE is it really an early retirement?
Barista Fire: The Right Move?
Barista FIRE pros
Barista Fire: Cons and Cons
Calculate your barista fire number
Baristas with FIRE jobs to consider
Barista Fire Alternatives
What is Barista Fire?
Barista FIRE refers to the idea of retiring early and having enough money invested so that you can still cover some of your initial expenses. You would work a part time job to cover your expenses or offer you health insurance.
You might have read this post because you heard about Barista Fire and it peaked your interest. When I heard about Barista FIRE, I immediately thought of Starbucks. You might have done the same.
Barista Fire was born from that idea. Starbucks offers decent benefits to all employees, even part-time baristas.
It is a very appealing type of FIRE for those who want to retire early. You don’t have to reach 25x your annual expenses. You can work part-time to supplement your expenses while your investments compound.
What is Barista Fire?
Barista FIRE encourages part-time work or gig economy to supplement your retirement. This income would complement your passive income streams through investments to ensure you have the retirement quality of life that you desire.
You will still save and invest during your working years, but you’ll do so less aggressively. No more 40+ hours of work per week! You will have the flexibility to work part-time in retirement.
Barista FIRE participants can expect to work 20 hours a week. This could be as a freelancer online, or as a part-time employee with additional benefits.
Barista FIRE Example
You plan to retire at age 40 and live off $40,000 a year. To safely retire early using the 4% rule, you’ll need to save up about $1,000,000.
Barista Fire allows you to reduce the amount of money you invest. If you invest $375,000, you will have $15,000 a year to live off. You can now find part-time jobs that will pay you up to $25,000 per annum and provide you with basic health insurance.
You can now aim to invest more, and this will allow you to take on more part-time work as you need less salary to cover the difference.
Barista FIRE is it really an early retirement?
Barista FIRE is not “retirement early” because you are technically still working. This type of FIRE lets you escape from the 9-5 (especially if your job or company is something you dislike), work less hours and still pursue the things you enjoy.
Barista Fire: The Right Move?
There are a few things you should consider before you dive into Barista FIRE. You will still be working a portion of the time.
This may come as a relief to many who fear the lack of routine they will likely find in retirement. Barista FIRE has its pros and cons, but there are also some downsides.
Barista FIRE pros
Lack of affordable healthcare is the main obstacle to early retirement. Barista FIRE lets you continue to work and subscribe to an employer sponsored healthcare plan. You can also add yourself to your spouse’s healthcare plan if they are still working. It will save you a lot of money compared to not working and it makes an early retirement more feasible. This could speed up your retirement.
Barista FIRE allows you to test the retirement waters. Early retirement may not be for everyone. It can bring a lack in routine and leave you without a sense of purpose. You may not have the money to enjoy yourself. Barista FIRE allows you to enjoy a relaxed lifestyle while maintaining your routine and purpose.
If your investment returns aren’t as high as you expected, then you have a safety-net. The stock market was very unstable in 2020 (although it recovered quickly). There were market corrections, recessions and market fluctuations. The ability to supplement your income will reduce the pressure you put on yourself and your portfolio.
Barista FIRE is not a job that locks you into an hourly-rate barista. You could work online, which supports a location independent lifestyle. Or you could be working on multiple paid projects simultaneously. The work you select can be very fulfilling and add to your lifestyle. Not only this, but 36% of Americans currently work in the gig-economy. This number is expected to increase in the future.
Barista Fire: Cons and Cons
Barista FIRE doesn’t offer financial freedom because you have to rely on your hours worked as a supplement to your income. Your financial independence and retirement plan would be affected if you were unable to work due to health issues or any other reason.
Barista FIRE can slow down your financial independence. It will allow you to work toward traditional FIRE but it is a slower path than adding aggressively to your investments every time.
The pressure is increased because you don’t know how the job market will be when you start your part-time job. The job market is extremely competitive due to the recent 2020 pandemic. For example, 12.6 million Americans were/are unemployed. Who’s to say it won’t happen again, or that some other event will impact the economy in future?
This form of FIRE requires that you continue to work full-time, be aggressive in your investing and frugal. This is especially true if you earn a salary below or average. You will still need to work for 15, 20, or even 25 years. If you start early enough, Barista FIRE may be achievable by your late 30s and 40s. This is still much earlier than the typical retirement age of 65.
Calculate your barista fire number
How to find your Barista Fire number
First, you’ll need to determine your annual cost. Calculate your monthly expenses and multiply by 12.
Estimate your annual income from a part-time position.
Subtract the part-time wage from your annual expenditures.
Barista FIRE is 25x your barista income (additional income).
Assume you need to spend $40,000 per year, which is equivalent to 4% of your FIRE number.
The lower the current investment, the higher you will need to earn in additional income. This can be in terms of hours worked or hourly rates.
Annual Withdrawals (Barista income) Annual Top-up Required
$40,000$250,000$10,000$30,000
$40,000$375,000$15,000$25,000
$40,000$500,000$20,000$20,000
$40,000$625,000$25,000$15,000
$40,000$750,000$30,000$10,000
$40,000$875,000$35,000$5,000
Baristas with FIRE jobs to consider
Barista FIRE is not limited to part-time work and you can pursue passions even in retirement.
Here are some ideas for side jobs and part-time work that will allow you to live out your early retirement dream:
Teach online. Online courses allow you to earn a TEFL certification and teach English as an additional language to students around the globe. You can also choose students from different time zones, which makes your hourly rate more flexible.
Consult or coach according to your past work experience. You’re probably at a mid-level position in your field if you’re considering early retirement. You can use your expertise to create income in retirement by taking on part-time consulting roles. You might be able to continue working at the company you love if you are a good fit.
You could be a barista. You may love coffee or there is a local cafe that you could easily work out of. You can work part-time and use your skills to serve and interact with people of all backgrounds.
Work in a high-end grocery store. A place like Wegmans, Whole Foods, or other similar stores could be an excellent place to work depending on where you live. They pay well (higher than most grocery stores), and offer a variety of benefits to employees (including those who work part-time).
Seasonal work. You may be aware that certain holidays and times of the year are more likely to create a demand for seasonal workers. These seasonal jobs are a good option if your part-time earnings are on the lower side.
Start doing odd jobs or tasks on Fiverr or Upwork. These gig economy websites offer jobs for digitally-savvy individuals, including online admin positions, graphic design, social networking, and more complex website tasks. The gig economy won’t cover your health insurance, but you could get reimbursed for those costs. If you have a spouse who is still employed, you could also consider it if they can provide coverage.
Barista Fire Tools to assist you in your Barista fire journey
Personal Capital allows you to track your net worth, investment, spending and much more.
Blooom can monitor your 401ks or IRAs. Free recommendations, catching hidden fees and more.
YNAB and Savology are both budgeting tools that can help you keep your spending in check, especially since Barista FIRE encourages frugal living. These budgeting tools will help you stay on track, especially with Barista Fire.
Barista Fire Alternatives
You’ve seen me mention it throughout the article. There are many other ways to achieve financial independence. Barista FIRE is a good option, but you have other options. Are you interested in finding out more? Here are some other types of fires:
Traditional Fire
Traditional FIRE is a good option if you want to save and invest more, but not have to supplement your income.
Lean FIRE
You may live more frugal and not need as much money in retirement as an average American. Lean FIRE is a better option in this situation.
Fat FIRE
Fat FIRE is the best option for those who want to retire with more money.
Coast FIRE
Coast FIRE suits younger people who want to invest aggressively now to have more time to enjoy their career later.
