Woman reading a book in a hammock by the sea at sunset, symbolizing relaxation, financial independence, and a stress-free lifestyle—key themes of Coast FIRE and Barista FIRE — Photo by Taryn Elliott on Pexels.

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Alternative Paths to Financial Independence

Rethinking the financial independence Journey

In last week’s blog post, I shared how I left my job before achieving financial independence (FI), prioritizing flexibility and well-being over traditional career paths. Burnout and the struggle to maintain a healthy work-life balance ultimately pushed me to reassess my career and make a change. Although I considered several alternatives, I decided to take the leap into setting myself up as a freelance consultant, hoping to kill two birds with one stone–to have a larger amount of freedom over my daily schedule and also return to the more technical work in my field that I had been pushed away from over the last few years.

As mentioned in the previous post, I acknowledge that there are some risks with my move. However, after 6-7 years of saving and investing aggressively on the path towards FI, this has not only given me substantial peace of mind, but also the necessary courage and confidence to take on this type of leap. I’m not sure I would have been able to take this risk without having gone down the rabbit hole of financial independence.

My gamble may very well not work out in the end. I may have to go back to a similar role I know well in a year or two, which would delay (only slightly) my timeline to reaching FI. But if things go reasonably well, this move means I get to switch gears back to doing work I actually enjoy and to dramatically improve my physical and mental wellbeing in the process.

Going through this experience has made me reflect on what I believe to be a fairly common occurrence in the FI community. Every week, I see discussions in financial independence Reddit communities where people share their struggles with burnout and career dissatisfaction. Many admit to missing out on key life experiences in their 20s and 30s or sacrificing relationships to reach financial independence faster. But the ultimate question is–will their journey be worth it or will they look back with regret?

Stressed woman at work, overwhelmed and experiencing burnout—highlighting a common struggle in the financial independence journey and the need for balance — Photo by Ron Lach on Pexels.

The overarching goal in our lives should be to live a content and meaningful life, which certainly should mean enjoying the whole process. While we have advocated many times in this blog to maintain a healthy savings rate that will get you quickly to FI, it is equally clear that we shouldn’t forget to enjoy ourselves or to put our mental health or relationships on the line. If some of this resonates with you–if you are feeling a bit lost in your path to FI, or perhaps already starting to experience your first burnout symptoms–then today’s post is definitely for you. What are the FI pathway alternatives that could manage to balance more effectively your wish for financial security with enjoying your life and minimizing regret at the end of it? Today, we outline two solid alternatives to grinding your life away toward some distant vision of "financial bliss and freedom".

Everyone is different and I am aware that taking the leap into freelancing may not be an exciting prospect for everyone. Therefore, over the course of several posts, we will be reviewing some of the different alternatives to following the traditional FIRE (financial independence, retire early) pathway. My hope is that some of you may feel aligned with and be able to consider and explore at least one of these alternatives, which still manage to effectively pursue financial independence, albeit in a more balanced way.

Coast FIRE vs Barista FIRE: Two Flexible Paths to FI

What is Coast FIRE? How to Achieve It and Who It’s For

The concept of Coast FIRE is to save aggressively early on so that, after a certain point, your investments are left to grow without making additional contributions, allowing you to work “only” to cover living expenses. In other words, pursuing Coast FIRE limits the intensive savings phase of the FI journey to a limited amount of years. After this initial period, you can sit back and allow compound interest to do the heavy lifting for you. Although this varies from case to case, we will illustrate this approach with a simple example using this Coast FIRE calculator as support (summarized in Figure 1):

Suppose you discover Coast FIRE at age 28. Because you don’t dislike your job, you envision working until age 60.
You envision needing about $50,000 in retirement. Then, as per the commonly-followed 4% rule of thumb, you would need to target a financial independence number of $1,250,000 ($50,000/4%).
Let’s say your household managed to save and invest $2,000 on a monthly basis during this initial, intensive savings phase. Then, assuming a 7% real return on investments from your portfolio, you could reach Coast FIRE in only 8 years at age 36. Not bad! What does this mean in practice?
Of course, this is just an example. The exact duration will vary depeding on factors like savings rate, portfolio returns, and desired retirement age.

Graph illustrating Coast FIRE strategy: saving aggressively for a set period, stopping contributions, and letting investments compound until retirement. — Figure 1: Example of Coast FIRE. Save aggressively for 8 years until age 36, then stop saving and let investments compound until retirement age. From age 36 to 60, you will be able to enjoy a substantially higher standard of living, as a result of not having to focus on savings any more.

This scenario is depicted in Figure 1. The grey dashed line represents the “baseline scenario”, i.e., what your portfolio would have looked like if you hadn’t pursued Coast FIRE, i.e., if you had continued to invest consistently on a monthly basis during your entire career. Following this baseline scenario would allow you to reach full financial independence at age 50, 10 years earlier than by following the Coast FIRE plan. However, by choosing to stop investment contributions at age 36 and pursue Coast FIRE instead (green line trajectory), you would be in a better place to fund a substantially higher lifestyle for 14 years from age 36 to 50. And that is not a bad tradeoff, especially if you are not unhappy in your current job.

The advantages of pursuing Coast FIRE are quite clear: it reduces mid-life savings pressure, making it ideal for families facing rising expenses while still allowing a comfortable lifestyle compared to traditional the FI pathway. For those that truly enjoy their career, then I think pursuing Coast FIRE could make a lot of sense.

Using the calculator linked above made me realize that I am already Coast FIRE to retire at 50 y/o–I could stop already my monthly contributions and still retire 15-17 years early. This knowledge certainly reduces even further the pressure to perform in my new role as I transition to work as an independent consultant. If things go really bad, we’re still in a very good spot.

Barista FIRE: The Semi-Retirement Approach That Keeps You Financially Secure

Next enters another popular variation of the financial independence journey–Barista FIRE. It is a FI strategy where individuals accumulate sufficient savings and investments to cover most, but not all, of their future expenses, allowing them to switch gears and leave a traditional full-time career early. But instead of relying fully on their investments, they supplement their investment income by working part-time or in a lower-stress job. In some countries where health care expenses represent a real headache (e.g., US), pursuing this approach could make sense for some.

Barista FIRE offers work-life balance and financial security by blending savings with part-time income. Unlike Coast FIRE, where investments are left untouched until retirement, Barista FIRE involves withdrawing some investment income earlier while maintaining a flexible part-time job for added security.

The term 'Barista FIRE' comes from Starbucks, known for offering part-time employees benefits like health insurance. The term symbolizes leaving a high-stress job to take on a more relaxed, flexible job, while still maintaining a large degree of financial independence.

Two baristas preparing coffee behind the counter in a relaxed café setting, illustrating the low-stress, part-time job aspect of Barista FIRE as a pathway to financial independence — Photo by Tim Douglas on Pexels.

We will illustrate this approach with a simple example using this Barista FIRE calculator as support. The example uses the same initial data we used in the Coast FIRE case:

Imagine you find out about this concept when you are 28 y/o. Your current annual take home pay is $74,000 after taxes and your annual expenses now (and in retirement) are $50,000. Analogous to the previous example we are starting out with zero net worth.
Assuming you manage to land a low-stress or hobby-related job that brings in $2,000 per month, you would be able to step away from your main career at age 45 (Figure 2). You would work under a decade at this low-stress or part-time job, and still manage to reach full financial independence and retire early at age 56 – not bad at all!

Graph showcasing Barista FIRE strategy: working full-time, then transitioning to part-time work while supplementing income with investments — Figure 2: Example of Barista FIRE. Save and invest for 17 years until age 45, then switch to a lower-stress, lower pay job. Live over the next decade off a combination of salary and investment income until reaching full financial independence at age 56.

This scenario is depicted in Figure 2 above. The grey dashed line represents the “baseline scenario”, i.e., what your portfolio would look like if you didn’t pursue Barista FIRE. Under this baseline scenario, you would continue to save and invest consistently until reaching full FI at age 50. However, by choosing to switch jobs to a lower stress and lower pay setup at age 45 and therefore pursuing the Barista FIRE pathway instead (green line trajectory), you would still be able to reach full financial independence at age 56. This means reaching financial independence only 6 years later, albeit likely enjoying the fruits of a more balanced, less stressful life over a decade. Effectively, this tradeoff means semi-retiring 5 years earlier but reaching full FI 6 years later, which could be an attractive compromise for many.

What is the difference between barista FIRE and coast FIRE and Which One Is Right for You

We presented two different alternative scenarios to the traditional path to FIRE, which attempts to grind away as quickly as possible to achieving full financial independence. However, this pathway is not without risks for many people, especially those related to burnout and missing out on other important aspects of life. Both Coast and Barista FIRE address this concern and provide two different approaches to address this.

What is the difference between Coast FIRE and Barista FIRE? Once you reach Coast FIRE, you still continue in your same job, but stop your monthly investment contributions. This allows you to increase substantially your monthly expenses after a certain point and to increase your lifestyle. This path works best if you enjoy your job or get some sense of fulfillment from it. In contrast, the Barista FIRE pathways is more suited to those wanting to leave their current jobs and pursue other reduced-stress, lower income-generating opportunities.

My Own Job Transition and How It Aligns With These FIRE Strategies

As mentioned earlier, I recently quit my high-stress job. The different terminology options presented today weren’t really on my mind when I made this decision. But now I am curious–how does this transition look like and does it align with any of the two strategies discussed in today’s post? I am definitely not taking the Coast FIRE path, since I changed jobs and intend to continue with my investment contributions going forward! That said, if I later decide to scale back work and rely on existing investments, it could still align well with a Coast FIRE approach.

On the one hand, you could argue that there are some elements to the Barista FIRE approach in my job transition, given that it will likely result in a lower stress job that I enjoy. And I certainly feel comfortable with the notion that my salary may very well be lower than it was. On the other hand, it is a freelance gig, I have to pay for many items (e.g., health insurance) that would normally be paid for in most jobs considered for Barista FIRE.

I don’t really feel like I am slowing down yet either. I was working part-time in my previous role, trying to reverse unsuccessfully the burnout symtoms. But transitioning to my new role, I feel excited to increase my working hours. I am working in a high-impact field for society and picking up the fruit of my own labor. It certainly has many elements that don’t align with the Barista FIRE pathway.

Man working from home with a relaxed, stress-free demeanor, representing the benefits of work-life balance and financial independence through Coast FIRE and Barista FIRE — Photo by Tony Schnagl on Pexels.

Choosing the Right FI Path Without Sacrificing Your Life

What sacrifices come with pursuing financial independence? As I’ve experienced myself and as many others have reported, grinding away and trying to reach FI too quickly in a career you don’t derive enjoyment from (or one from which you outright suffer from) will certainly result in a very bumpy ride. Sure, it can be done, and many out there have managed to successfully get to the finish line. But at what cost? As today’s examples show, financial independence often involves certain trade-offs. It’s important to take a step back and fully understand what it is you are trading here–is it your mental health, time with your family, friendships, missing out on key life events, or perhaps a mixture of the above?

Achieving financial independence doesn’t require relentless sacrifice for an arbitrary number. As illustrated today, pursuing Coast FIRE and Barista FIRE can be two solid options that still grant you early on with many of the benefits of financial security, while offering a greater degree of balance, flexibility, and personal well-being in your life.

I would love to hear your thoughts–do any of these alternatives resonate with you? Please let us know in the comments if you’ve pursued an alternative to the traditional FI path grind.

This is the first post of a series where we will discuss further alternatives to following the traditional path to financial independence. We envision other posts being related, but not limited, to: pursuing slow FI; engaging in mini-retirements throughout your career; using the power of geoarbitrage to retire early (retiring abroad); lean FIRE; and many others. Stay tuned!

Also, if you’ve enjoyed today’s post, don’t miss our article on where we explain the interplay of status, money, truth, or freedom in our lives or our post on how difficult it is to experience job fulfillment today.

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Coast FIRE vs Barista FIRE: Finding Balance on Your Path to Financial Independence