The formula
How to calculate barista FIRE
Barista FIRE is the middle position: a portfolio big enough to cover most of your spending, with light part-time work filling the gap. The name comes from taking a job for the health insurance in the US, though the arithmetic travels fine.
The leverage is what makes this attractive. Because the target is 25 times the shortfall rather than 25 times total spending, modest earnings remove a great deal of required capital — £16,000 a year of work takes £400,000 off the target.
Fill in the following:
- Annual spending
- Part-time income after tax
- Withdrawal rate (%)
Everything recalculates as you type, and the numbers in the address bar update with it, so a link to this page carries your figures with it.
Worked example
A concrete run-through, using the values already in the fields:
- Annual spending: 40,000
- Part-time income after tax: 16,000
- Withdrawal rate: 4 %
That gives:
- Barista FIRE number: 600,000
- Less than full FIRE by: 400,000
- Share of spending covered by work: 40 %
Reading the result
The plan's weakness is that it depends on continuing to be employable. Build in what happens if the work stops: either a portfolio that could stretch to full coverage at a pinch, or spending that could fall to meet it.
Where this goes wrong. Using gross part-time earnings. Use the figure after tax and National Insurance, and remember that drawing from a pension in the same year can push that income into a higher band.
Whatever covers the gap. Two or three days a week at a modest rate is typical, and the calculator shows what each pound of it is worth in portfolio terms — usually far more than people expect.
It is a different trade: less capital required, more flexibility now, some continued dependence on working. Many people who reach full independence carry on doing something anyway, which makes the distinction narrower in practice than in theory.
The answer it gives you is barista FIRE number. With 40,000 annual spending, 16,000 part-time income after tax and 4 % withdrawal rate, that comes to 600,000. Change any field and the figure moves with it.