Coast FIRE is about achieving financial independence early in life, where your investments grow over time to cover expenses in traditional retirement. Unlike traditional FIRE, this approach doesn’t require an individual to reach complete financial independence before reducing work hours or stress. Here’s how it works:
- Early Saving and Investing: Individuals save and invest aggressively early in their careers to build a substantial portfolio.
- Reduced Saving: The need for aggressive saving diminishes once you reach a particular investment threshold—the existing investments to grow and cover retirement needs.
- Continued Earning: Individuals may continue to work, but they can opt for less stressful or part-time jobs since there’s less pressure to save.
- Living Life: With a financial cushion, individuals can pursue hobbies, spend time with family, or explore new careers without financial stress.
Barista FIRE also allows for early retirement from stressful or high-hour jobs but with a part-time job to cover current living expenses and possibly provide benefits like health insurance. The name “Barista FIRE” comes from the idea of working a lower-stress job, like a barista, during retirement. Key aspects include:
- Partial Financial Independence: Individuals achieve financial independence when their investments cover part of their living expenses.
- Part-time Work: Engaging in part-time work or gigs that are less stressful or more enjoyable to cover the rest of their costs.
- Potential for Benefits: Some choose part-time jobs that offer benefits like health insurance, which can be a significant expense in retirement.
- Quality of Life: The goal is to improve the quality of life by reducing work stress while maintaining a comfortable lifestyle.
Comparison of Coast FIRE to Barista FIRE
- Path to Financial Independence: Barista FIRE individuals may reach partial financial independence quicker than Coast FIRE individuals since they continue to earn an income through part-time work.
- Work Involvement: Coast FIRE allows for a complete break from work if desired, whereas Barista FIRE involves continuing to work part-time.
- Financial Security: Barista FIRE might provide more financial security as individuals continue to earn an income, which can be especially beneficial in market downturns.