Barista FIRE Calculator

What Is Barista FIRE (Financial Independence, Retire Early)?

Barista FIRE is the combination of early retirement and part-time work. Those pursuing Barista FIRE aim to save aggressively to the point where they can live off their investments while working part-time or pursuing lower-stress, more enjoyable jobs. Some folks prefer this setup for as long as they can, while others work until they can fully retire.

How Does FIRE Work?

Two key components of FIRE are saving aggressively and investing wisely. By starting saving your income early and investing the sums, compound interest can accelerate the journey to Financial Independence and Retire Early.

How to Calculate Full Retirement Goal?

Calculating your Full Retirement goal involves determining the required retirement net worth. To achieve this, you need to understand two key components: retirement annual spending and withdrawal rate.

1. Retirement Annual Spending

Retirement Annual Spending is your estimated spending for any given year during retirement. This involves creating a detailed budget that takes into account all your future expenses, including housing, healthcare, travel, hobbies, and any other costs you expect to incur. It's important to be realistic and thorough in this assessment to ensure your retirement years are financially comfortable.

2. Withdrawal Rate

Withdrawal Rate represents the percentage of your net worth that you anticipate withdrawing annually to cover your retirement expenses. A lower withdrawal rate implies a safer and more conservative approach to financial independence, as it reduces the risk of outliving your savings.

The widely accepted safe withdrawal rate is typically between 3% and 4%. This means that for every $1 million in your retirement portfolio, you can withdraw $30,000 to $40,000 annually, assuming a 3% to 4% withdrawal rate.