Two milestones, one destination
Full financial independence — a portfolio large enough that withdrawals cover all spending indefinitely — is a long way off for most savers. Coast FIRE and Barista FIRE are the two most-cited intermediate checkpoints on the way there, and they are routinely confused because both mean "you can stop doing something before you are fully FI." The something is different, and so is the math.
Coast FIRE asks: is what you have already invested enough that, with zero further contributions, compounding alone carries it to your FI number by your retirement age? You keep working full time — you just stop needing to save. Barista FIRE asks: is your portfolio large enough that a part-time job — the proverbial barista shift, often taken partly for employer or marketplace health coverage — plus modest withdrawals can cover your spending until the portfolio finishes the job? You stop the career itself.
The shared foundation: a FI number
Both milestones start from the same target — the portfolio that could fund your annual spending at a chosen withdrawal rate:
FI number = (annual spending − other income offsets) / withdrawal rate
The familiar 4% figure traces to Bengen's 1994 study in the Journal of Financial Planning and the 1998 Trinity study (Cooley, Hubbard, and Walz, AAII Journal), both of which tested fixed real withdrawals against historical US market sequences over 30-year retirements. Treat the rate as an adjustable assumption, not a law: for $60,000 of annual spending, the FI number spans roughly $1.2M to $1.71M as the rate moves from 5% down to 3.5% — the target itself is a range before either milestone enters the picture.
Coast FIRE: the time lever
Coasting is a discounting problem. Take the FI number and pull it back to today through the years you still intend to work:
coast number = FI number / (1 + rreal)years to retirement
r is a real (after-inflation) return, net of fees and any tax drag — so the answer stays in today's dollars.
If your invested assets already exceed the coast number, every dollar of future salary can go to living rather than saving. The catch is the exponent: the answer is violently sensitive to the return assumption. A 35-year-old aiming at a $1.5M FI number by 65 has a coast number of about $618,000 at 3% real, $347,000 at 5% real, and $197,000 at 7% real — a threefold spread from a single slider. That is why a one-rate green checkmark is not information; the projection is only honest as a band. The Coast FIRE calculator quotes exactly that 3/5/7% real band and then replays every historical start year since 1928 (S&P 500 total return, CPI-deflated) to report the share of actual windows in which coasting reached the target.
One label worth getting right: because coasting is a lump sum with no cash flows, the terminal value is a pure product of returns — the order of good and bad years cannot change it. The spread across start years is realized-CAGR path dispersion, not "sequence-of-returns risk." Sequence risk needs contributions or withdrawals to exist, which is precisely what Barista FIRE adds.
Barista FIRE: the income lever
Barista FIRE is not a discounting problem — it is a bridge-budget problem with a feedback loop in the middle:
required portfolio = gross annual withdrawal / withdrawal rate
where the gross withdrawal must cover: living expenses + net health premium (a function of MAGI) + taxes on wages and on the withdrawal itself − after-tax part-time wages
MAGI depends on the withdrawal, the subsidy depends on MAGI, and the withdrawal depends on the subsidy — a fixed point, not a one-line formula.
Three costs enter here that Coast FIRE never sees. First, part-time W-2 wages are taxed — federal income tax plus FICA (6.2% Social Security + 1.45% Medicare on the employee side). Second, withdrawals carry account-type tax character: traditional-account dollars are ordinary income and count fully toward MAGI; taxable-account sales add only the realized-gain slice; Roth withdrawals add nothing to MAGI at all, which makes the account mix a structural input rather than a detail. Third — and largest — health insurance stops being an employer line item and becomes marketplace arithmetic.
Healthcare is the dividing line
A Coast FIRE household typically keeps employer coverage, because it keeps the full-time job. A Barista FIRE household typically buys marketplace coverage, and under 2026 law the premium tax credit that prices it follows the §36B schedule: households between 100% and 400% of the federal poverty level contribute between 2.10% and 9.96% of MAGI toward the benchmark plan, and the credit covers the rest (IRS Rev. Proc. 2025-25). Above 400% FPL there is no credit at all.
The 2026 cliff — and why it is a moving target
The enhanced (ARPA/IRA) credits expired 2025-12-31, restoring the 400% FPL eligibility cliff for 2026. Against the 2025 poverty guidelines that govern coverage year 2026, the cliff sits at a MAGI of $62,600 for a single filer and $84,600 for a household of two (48 states + DC). One dollar of MAGI over the line forfeits the entire credit. The US House passed a three-year extension on 2026-01-08, but the Senate has not; every 2026 subsidy figure is a projection under current law, not a settled amount.
The cliff's size scales with age, because premiums are age-rated up to 3:1. Using KFF's 2026 national average benchmark of $625/month for a 40-year-old, a single 40-year-old just under the cliff holds a projected credit of roughly $1,300/year — but a 64-year-old, whose benchmark scales to roughly $1,470/month, stands to forfeit a credit on the order of $11,000/year by crossing the line by a single dollar. These are illustrative figures from national averages; the actual benchmark varies by rating area. The practical point: for Barista FIRE, MAGI management — which account you withdraw from, and how much — can move the required portfolio by more than the withdrawal-rate debate does. The Barista FIRE calculator solves the MAGI→credit→withdrawal loop explicitly and draws the cliff as a live curve.
Side by side
| Coast FIRE | Barista FIRE | |
|---|---|---|
| What stops | New contributions | The full-time career |
| What continues | Full-time paycheck covers living costs | Part-time wages + portfolio withdrawals |
| Portfolio during the bridge | Untouched, compounding | Drawn on (or held flat) alongside wages |
| Core math | FI number ÷ (1 + r)n — a discount through time | Fixed-point solve: wages, withdrawal taxes, and the MAGI→subsidy loop |
| Health coverage | Usually employer plan (still employed full time) | Marketplace plan — the ACA credit is the swing variable |
| Dominant uncertainty | Realized-CAGR path dispersion across start years (order-independent) | Sequence-of-returns exposure plus subsidy-law policy risk |
| Tax surface | Growth only; drag depends on account type | W-2 federal + FICA, withdrawal tax by account, MAGI effects |
| Question answered | "Can I stop saving?" | "Can I leave the career now?" |
Which profile does each milestone describe?
Neither milestone is a plan to adopt off a page — but the math does distinguish two profiles.
Coast FIRE tends to fit savers who are earlier in the timeline with decades of compounding ahead (the exponent does the work), who hold employer health coverage they intend to keep, and whose main question is whether the savings pressure can relax. Its risk surface is comparatively simple: the projection depends almost entirely on the real-return assumption, which is exactly why it deserves a band and a historical success rate rather than one rate's checkmark.
Barista FIRE tends to fit people closer to a career exit, often mid-40s to 50s, for whom the binding constraint is pre-Medicare health coverage rather than portfolio growth. It rewards a deliberate account mix — Roth and basis-heavy taxable dollars keep MAGI low and the credit high — and it demands attention to the cliff, since the marginal cost of one extra dollar of MAGI at the boundary is measured in thousands. It also carries genuine sequence risk: withdrawals during a weak market do permanent damage in a way a coasting lump sum cannot experience.
They stack rather than compete
The two milestones are checkpoints on one path, not rival strategies. A common shape: reach the coast number first while fully employed, keep working without saving, and later — once the portfolio has grown and the remaining bridge is short — step down to part-time work with marketplace coverage. Reaching Coast FIRE strictly lowers the portfolio a later Barista FIRE phase requires; running both calculators against the same spending figure shows the distance between your coast checkpoint and your bridge budget.