How does Barista FIRE reduce the portfolio size I need to save?

Barista FIRE lets part-time or lower-stress work cover a portion of your expenses, so your portfolio only has to fund the rest, which shrinks your target. If you spend $50,000 a year and a part-time job nets $20,000, your portfolio needs to cover just $30,000, implying about $750,000 at a 4% rate instead of $1.25 million.

The name comes from the idea of a job that provides benefits, historically employer health insurance, while you semi-retire. Beyond the smaller number, the ongoing income cushions sequence risk by reducing withdrawals in your portfolio's fragile early years, and subsidized health coverage can be worth far more than the wages alone. The trade-off is that you are still working, so it suits people who want freedom and flexibility more than total escape from work.