My Tax Strategy
Intro
I currently have a local government job where my salary is 82k and I max out 401k, 457b, HSA (with small employer contribution). Plus I contribute to a pension account I control instead of Social Security. I work some part time jobs also to make some extra money. I live in my SUV to keep my normal monthly expenses super low. All legal tax strategy… I keep the most of my money! The entire plan is to basically save 100% of my money from main job and live off of part time jobs. I want to supercharge my progress so I can FI by 50 so I can enjoy some "young-ish" years and go do some things before I get too old.
~~~~ AI Analysis ~~~~
The 2026 Adjusted Gross Income (AGI) Calculation
To find your tax burden, we subtract every pre-tax deduction from your gross pay. In this scenario, 65% of your gross salary is diverted into pre-tax accounts before the IRS even sees it.
| Category | Calculation | Annual Total |
|---|---|---|
| Gross Annual Salary | $82,618.07 | |
| 401(k) Contribution | 2026 Max | ($24,500.00) |
| 457(b) Contribution | 2026 Max | ($24,500.00) |
| CO PERA Contribution | $378.67 × 24 | ($9,088.08) |
| HSA (Employee Portion) | $142.92 × 24 | ($3,430.08) |
| Health Insurance (Net) | $48.46 × 24 | ($1,163.04) |
| Adjusted Gross Income | $19,936.87 |
2026 Tax Burden Breakdown
Now we apply the standard deduction and calculate the remaining taxes based on your AGI of $19,936.87.
1. Federal Income Tax
- Standard Deduction: Estimated at $16,100 for single filers in 2026.
- Taxable Income: $19,936.87 - $16,100 = $3,836.87
- Tax Bracket: You fall entirely within the 10% bracket.
- Federal Tax Owed: $383.69
2. Medicare Tax (No Social Security)
Since you contribute to PERA, you do not pay the 6.2% Social Security tax. However, you are still responsible for the 1.45% Medicare tax.
- Medicare Taxable Wages: $82,618.07 - $4,593.12 (HSA/Health) = $78,024.95
- Medicare Tax (1.45%): $1,131.36
3. Colorado State Tax
Colorado taxable income typically mirrors Federal taxable income after the standard deduction.
- CO Taxable Income: $3,836.87
- State Tax (4.4% Flat): $168.82
Efficiency Summary
| Metric | Amount |
|---|---|
| Total Taxes Paid | $1,683.87 |
| Total Pre-Tax Savings | $61,518.16 |
| Effective Tax Rate | 2.04% |
| Annual Take-Home | $18,253.00 |
| Per-Paycheck Take-Home | $760.54 |
Tax Efficiency Insights
- The Power of PERA + Dual Max: By utilizing the 401(k), 457(b), and PERA, you have reduced your federal taxable income to a level lower than that of someone working a minimum-wage job.
- Avoidance of High Brackets: Without these contributions, your "top" dollars would have been taxed at 22%. Instead, your highest tax rate is only 10%, and even that only applies to a small sliver of your income ($3,836).
- The PERA Advantage: Since you are not paying into Social Security (6.2%), you are saving $4,837 in FICA taxes that a typical private-sector employee with your salary would be forced to pay.
- Take-Home vs. Savings: You are successfully saving $3.37 for every $1.00 you pay in taxes.
This strategy is highly efficient, though it leaves you with a lean monthly budget of roughly $1,521. If you can maintain your lifestyle on that amount, you are essentially building a decade's worth of retirement wealth every 3–4 years.
Intro
I currently have a local government job where my salary is 82k and I max out 401k, 457b, HSA (with small employer contribution). Plus I contribute to a pension account I control instead of Social Security. I work some part time jobs also to make some extra money. I live in my SUV to keep my normal monthly expenses super low. All legal tax strategy… I keep the most of my money! The entire plan is to basically save 100% of my money from main job and live off of part time jobs. I want to supercharge my progress so I can FI by 50 so I can enjoy some "young-ish" years and go do some things before I get too old.
~~~~ AI Analysis ~~~~
The 2026 Adjusted Gross Income (AGI) Calculation
To find your tax burden, we subtract every pre-tax deduction from your gross pay. In this scenario, 65% of your gross salary is diverted into pre-tax accounts before the IRS even sees it.
| Category | Calculation | Annual Total |
|---|---|---|
| Gross Annual Salary | $82,618.07 | |
| 401(k) Contribution | 2026 Max | ($24,500.00) |
| 457(b) Contribution | 2026 Max | ($24,500.00) |
| CO PERA Contribution | $378.67 × 24 | ($9,088.08) |
| HSA (Employee Portion) | $142.92 × 24 | ($3,430.08) |
| Health Insurance (Net) | $48.46 × 24 | ($1,163.04) |
| Adjusted Gross Income | $19,936.87 |
2026 Tax Burden Breakdown
Now we apply the standard deduction and calculate the remaining taxes based on your AGI of $19,936.87.
1. Federal Income Tax
- Standard Deduction: Estimated at $16,100 for single filers in 2026.
- Taxable Income: $19,936.87 - $16,100 = $3,836.87
- Tax Bracket: You fall entirely within the 10% bracket.
- Federal Tax Owed: $383.69
2. Medicare Tax (No Social Security)
Since you contribute to PERA, you do not pay the 6.2% Social Security tax. However, you are still responsible for the 1.45% Medicare tax.
- Medicare Taxable Wages: $82,618.07 - $4,593.12 (HSA/Health) = $78,024.95
- Medicare Tax (1.45%): $1,131.36
3. Colorado State Tax
Colorado taxable income typically mirrors Federal taxable income after the standard deduction.
- CO Taxable Income: $3,836.87
- State Tax (4.4% Flat): $168.82
Efficiency Summary
| Metric | Amount |
|---|---|
| Total Taxes Paid | $1,683.87 |
| Total Pre-Tax Savings | $61,518.16 |
| Effective Tax Rate | 2.04% |
| Annual Take-Home | $18,253.00 |
| Per-Paycheck Take-Home | $760.54 |
Tax Efficiency Insights
- The Power of PERA + Dual Max: By utilizing the 401(k), 457(b), and PERA, you have reduced your federal taxable income to a level lower than that of someone working a minimum-wage job.
- Avoidance of High Brackets: Without these contributions, your "top" dollars would have been taxed at 22%. Instead, your highest tax rate is only 10%, and even that only applies to a small sliver of your income ($3,836).
- The PERA Advantage: Since you are not paying into Social Security (6.2%), you are saving $4,837 in FICA taxes that a typical private-sector employee with your salary would be forced to pay.
- Take-Home vs. Savings: You are successfully saving $3.37 for every $1.00 you pay in taxes.
This strategy is highly efficient, though it leaves you with a lean monthly budget of roughly $1,521. If you can maintain your lifestyle on that amount, you are essentially building a decade's worth of retirement wealth every 3–4 years.
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Comments
You have an impressive savings rate. You might review the fees you’re paying with your investments (e.g., expense ratios) and if you have a taxable account whether your asset locations are tax efficient. Fees and taxes create a drag on growth. Since you plan to retire in 2 years, you might also review whether your asset allocation is inline with starting decumulation.
You mention wanting to reach FI by 50 so you can enjoy life while you’re still young. Make sure you’re not delaying living your life until you reach your goal. Maybe start doing some of the things now that you’re picturing for your post-FI life.
This is definitely Old School "Early Retirement Extreme" style. I haven't seen plans like this in quite a while. Making me feel nostalgic.
Good luck with it and make sure you can sustain it. No real penalties if you can't, but I would also work on increasing income if possible, because your maximum efficiency is actually somewhere around a 120K income with something like this.
I think a lot about how I can increase income… that is the big thing I can do and the obvious improvement. I don't see too much opportunity in my current position so to do that I'll have to look for another job.
I think I can do this for maybe 2 more years. Or maybe back off a bit and enjoy life more and then go more. But I really want to FI by 50 and not keep working beyond that.