Work out a smaller number for a life where part-time income pays for some of your spending.
Write down three figures now: your yearly spending, the FI number you worked out earlier, and a rough guess at what you could earn from part-time work in a year. You'll use all three below, because part-time income can shrink the portfolio you need by a large amount.
Many people leave a corporate job and keep working. One teaches yoga three mornings a week, another does freelance bookkeeping for a few small firms, and a third works weekends at a friend's cafe because she likes the people. None of them is fully retired, and none needs a full salary. Their portfolios pay part of their spending and their work pays the rest. The FI community has a name for this arrangement, and it can bring the finish line much closer.
Lesson 5.1, "Coast FI: when you can stop adding", was about stopping new saving. The next step is stopping full-time work. Barista FI means your portfolio covers part of your spending at your chosen withdrawal rate, and part-time or project work reliably covers the rest. The name comes from working a few shifts in a coffee shop, but the work can be consulting, tutoring, a small business, or a lower-pressure version of your current job.
At coast FI you still work full time or close to it to pay today's bills, with no new saving needed. At barista FI you have stopped full-time work but still earn some income. At full FI you need no work income at all.
From lesson 2.1, "Where the 4% rule came from", your FI number is yearly spending times a multiple, and the multiple is 1 divided by your withdrawal rate. Part-time income reduces the spending the portfolio has to carry, so each dollar of yearly income lowers the number by that same multiple. A few days of work a month can be worth hundreds of thousands of dollars of portfolio.
Priya (an invented example) has a made-up spending base of S$44,000 a year. At a 3.5% withdrawal rate the multiple is about 28.6 (1 / 0.035), so her single-figure number is about S$1,257,000. If she earns S$1,500 a month from part-time work, that is S$18,000 a year, and the portfolio carries S$26,000 a year instead of S$44,000. Her new number is S$26,000 / 0.035, about S$743,000, which is about S$514,000 lower.
For yours, find the multiple for your withdrawal rate. Subtract reliable yearly part-time income from yearly spending, then divide the remainder by the withdrawal rate or multiply it by the multiple. The gap between this and your full FI number is what the income is worth.
The two-part number from lesson 3.4 needs more care, because part-time work usually doesn't last for life. If the work stops before CPF LIFE payouts begin, it reduces only the bridge portion, and the long-term portion stays the same. Working after 65 would shrink the long-term figure too, but most plans are safer not assuming that.
Suppose Priya works part time from 50 until 65, then stops completely and starts her CPF LIFE payouts at 65, her payout eligibility age, giving a fifteen-year bridge. Payouts do not start on their own at 65. If she gives CPF Board no instruction about her CPF LIFE plan, they start automatically at 70, so check with CPF Board how to start them earlier. Her bridge spending from the portfolio falls from S$44,000 to S$26,000 a year, so the bridge total is S$390,000 (S$26,000 x 15) instead of S$660,000 (S$44,000 x 15). Her long-term figure after 65 stays at about S$777,000. Her barista number is about S$1,167,000 (S$390,000 + S$777,000), against about S$1,437,000 (S$660,000 + S$777,000) for full FI, so the part-time work is worth S$270,000 to her plan.
For yours, set the period of part-time work, reduce yearly bridge spending by the income, and multiply by the number of bridge years. Leave the long-term figure unchanged unless you plan to work after 65. Add the two parts and compare with full FI.
If you are employed, even part time, you and your employer may pay CPF contributions on your wages, depending on how much you earn; the CPF Board website lists the wage levels at which they apply. These keep building your CPF accounts, including MediSave, which matters for module 7. Some roles come with group insurance or other benefits that reduce what you pay privately. Work also brings structure, colleagues and a sense of being useful, which many people miss more than the salary, as lesson 8.1 shows.
Barista FI depends on work you may not always be able to find or do. Industries and health change, the friend's studio could close, and demand for freelance bookkeepers could fall. A plan that assumes S$18,000 a year for fifteen years is a fifteen-year bet on the job market and on your own body. Without a fallback, you have swapped one dependency, a full-time employer, for a less reliable one.
Before you rely on the income, ask what you would do if the work stopped in the third year. You could cut flexible spending using the split from lesson 1.2, "Essential and flexible spending", draw a little more from the portfolio for a while, or go back to fuller work. Write down which you would choose and roughly how long it could last.
Before you start the activity, think about the part-time work you could realistically get and keep. Use an amount you would be fairly confident of earning year after year, not the most you could earn in a good year.
Choose a part-time income you could realistically earn and work out how much it cuts your number at your chosen withdrawal rate.
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