Are you intrigued by the FIRE movement, but worried about how long it will take to get to retirement? Do you enjoy working and want to keep doing so? If you want to retire from your full-time job as early as possible, and still maintain a comfortable lifestyle, you might want to consider Barista FIRE.
What is Barista FIRE?
Barista FIRE is a retirement strategy that allows you to retire earlier than the traditional retirement age but still earn some income by working part-time, usually in a low-stress job (hence the term “barista”). This way, you can supplement your retirement income and continue to enjoy the benefits of being employed, such as social interaction with colleagues, medical benefits (in some cases) and a sense of purpose. Who doesn’t love chats over lunch with your workmates or enjoying that free cup of coffee your workplace provides (if you are a barista, I imagine these are quite plentiful)? If you’ve looked at that FI goal and said, “oof, that’s a massive amount of cash”, then consider reducing the time to get to that magic number using Barista FIRE.
How Does Barista FIRE Work?
The concept of Barista FIRE is simple. Like with the regular financial independence retire early (FIRE) concept, you save aggressively during your working years, reduce your expenses, and invest your money in a diversified portfolio. This way, you can accumulate a significant amount of wealth that can generate passive income to cover your basic expenses.
Once you reach your desired FI goal, you can then retire from your high-stress, long hours, full-time job and switch to something part-time which you enjoy, which will fill your days and supplement your income. This approach allows you to reduce your reliance on your investment portfolio and preserve your wealth for the long term. For example, since you are making some active income, you can use this money first and withdraw less from your portfolio, setting you up for a longer retirement, since studies have shown with a lower rate of withdrawal from your investments when you retire, will almost guarantee you won’t run out of funds.
What Are The Advantages of Barista FIRE?
Barista FIRE has several advantages over the “traditional” retirement plan, such as:
- You can retire earlier and enjoy your retirement while you are still young and healthy;
- You can reduce your stress levels by working in a lower-stress job;
- You can supplement your retirement income and continue to enjoy the benefits of being employed;
- You can preserve your wealth, withdraw less moo-lah from your investment portfolio and avoid the risk of running out of money during your retirement.
What Are The Disadvantages of Barista FIRE?
Barista FIRE also has some disadvantages that you should consider, such as:
- Just like regular FIRE, you need to save aggressively and reduce your expenses during your working years;
- Also like regular FIRE, you need to have a significant amount of wealth to generate enough passive income to cover your basic expenses;
- You need to be willing to work part-time in a lower-stress job, which may not be suitable for everyone. But think of it this way, ever wanted to try a cool, creative job but you didn’t want to risk your full-time gig to go for it? Here’s your chance!
Is Barista FIRE Right For You?
Barista FIRE is part of the FIRE movement and not for everyone. It requires discipline, patience, and a willingness to sacrifice some luxuries during your working years. However, if you are willing to put in the effort, Barista FIRE can be a rewarding retirement strategy that allows you to retire earlier and enjoy your retirement while you are still young and healthy.