Barista FIRE Income Needed
Calculate how much part-time income covers the gap between portfolio withdrawals and living expenses.
=annual_expenses - (portfolio * withdrawal_rate) How It Works
Barista FIRE is a form of semi-retirement where portfolio withdrawals cover part of your expenses and part-time work covers the rest. This formula calculates the income gap - the amount you’d need to earn from work.
Syntax
=annual_expenses - (portfolio_value * withdrawal_rate)If the result is zero or negative, the portfolio covers everything on its own.
Example
Situation:
- Annual Expenses: $48,000
- Portfolio Value: $600,000
- Withdrawal Rate: 4%
Formula: =48000 - (600000 * 0.04)
Result: $24,000/year part-time income needed ($2,000/month)
Income Gap at Different Portfolio Sizes
| Portfolio | 4% Withdrawal | Annual Gap (on $48K expenses) | Monthly Gap |
|---|---|---|---|
| $400,000 | $16,000 | $32,000 | $2,667 |
| $600,000 | $24,000 | $24,000 | $2,000 |
| $800,000 | $32,000 | $16,000 | $1,333 |
| $1,000,000 | $40,000 | $8,000 | $667 |
| $1,200,000 | $48,000 | $0 | $0 |
Variations
With Employer Health Insurance
One reason people pursue Barista FIRE is access to employer health benefits. Factor that in:
=(annual_expenses + health_insurance_cost) - (portfolio * withdrawal_rate)If the part-time job provides insurance, subtract that cost from expenses instead.
Monthly Version
=(monthly_expenses) - ((portfolio * withdrawal_rate) / 12)Setting Up a Barista FIRE Calculator
| A | B |
|---|---|
| Annual Expenses | $48,000 |
| Portfolio Value | $600,000 |
| Withdrawal Rate | 4% |
| Annual Withdrawal | =B2*B3 |
| Income Gap (Annual) | =B1-B4 |
| Income Gap (Monthly) | =B5/12 |
| Hourly Rate Needed (20hrs/wk) | =B5/(20*52) |
Pro Tips
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Include taxes - part-time income is taxable, so gross earnings may need to be higher than the gap
-
Consider variable spending - some years may cost more than your baseline estimate
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Account for benefits - health insurance, retirement matching, and other perks have real value
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A negative result means full FIRE - if the gap is zero or below, the portfolio handles it all
Common Errors
- Mixing time periods - make sure expenses and withdrawals use the same period (both annual or both monthly)
- Forgetting taxes on withdrawals - depending on account type, withdrawals may also be taxed
- Using gross income for expenses - expenses should reflect actual spending, not pre-tax amounts