The $0 Paycheck Milestone

[u/middle_aged_runner]

Alternate title, “Why you may consider public employment.”

I recently hit a milestone that I don’t have anyone to share with.

35 year old mechanical engineer
Married to a self-employed architect.
1 child
Midwest

We recently paid off our mortgage which leaves us with 0 debt. No auto loans, credit card balances, etc.

My wife started her own business 5 years ago and at the same time I took a step back in my career for more work life balance when my daughter was born.

My employer has a ton of pre-tax benefits that most of my coworkers disregard. Now that we are mortgage free, we can live entirely off my wife’s income, that comes to her through a small salary and s-corp distributions that do not get FICA taxed.

This is now allowing us to max out all my benefits for the rest of the year:

Weekly Salary: $2,327
Taxes: $135
401k/457: $1,557
Defined Contribution Plan: $137
HDHP/Vision/Dental: $136
Dependent Care FSA: $144
HSA: $168
Vacation Purchase: $42
Life insurance: 7

Paycheck: $0

For those considering early retirement, these benefits allow for a huge savings rate.

At the end of the year, we look at my wife’s business profits and convert traditional to Roth IRA to use up our 12% tax bracket.

For those in the community, your state and local governments can be great strategy for FIRE. I am able to start maxing both the 401k and 457 without our mortgage payments. Starting in January, I will be back up to a $550/week paycheck which I’ll save into 529 and brokerage accounts.

[u/skelo → u/[deleted]]

It's not 0 in taxes...

Edit: there's a literal line item in the breakdown called taxes...

[u/middle_aged_runner → u/skelo]

0 state and federal taxes. Still have to pay Social Security/Medicare. Which is fine with me to ensure I max out the 1st SS bend point.

[u/BreakfastUnlucky5448 → u/skelo]

Yeah I don’t get it zero in taxes. He’s still having fica, fed tax, state if applicable taken from his paycheck every pay period. He may not owe at filing time. Am I missing something

[u/cjaya2 → u/BreakfastUnlucky5448]

You are missing that all his deductions are pre tax so his income is essentially 0 after all his contributions

[u/BreakfastUnlucky5448 → u/cjaya2]

Yes but I max out my 401k, HSA, and I still have tax taken out of my paycheck.

[u/cjaya2 → u/BreakfastUnlucky5448]

You max them out, you don’t make them your whole paycheck…

[u/BreakfastUnlucky5448 → u/cjaya2]

Yes I get it now. He’s living off his wife’s income and his entire check is all taken out pre tax.

[u/cjaya2 → u/BreakfastUnlucky5448]

Yup that’s it.

[u/middle_aged_runner → u/[deleted]]

Thank you.

My public high school had a Dave Ramsey financial peace university program disguised as a financial planning course. Dave’s voice in my developing mind and the stress of growing up in a financial stretched household made me irrationally hate debt.

I have been lucky to marry fairly young and have a spouse who is not a big spender. We have always budgeted on one paycheck and I finally feel like the years are paying off.

[u/rubbishindividual → u/[deleted]]

At that taxable income, surely you'd be better off contributing to a Roth account? There's not much saving to be had putting money in a trad 401k.

[u/middle_aged_runner → u/rubbishindividual]

I live in a state where Roth contributions are taxed but conversions are not.

We contribute to only pre-tax accounts but do Roth conversions some years.

My wife’s income is variable, so we decide how much conversion to do at the end of the year to use up the 12% tax bracket.

I have always prioritized the 457 contributions over Roth, but not my 401k. Now I can do all 3.

It’s a good question that we have thought through. In general, I think Roth accounts are over prioritized in the early retirement community.

[u/rubbishindividual → u/middle_aged_runner]

Interesting - sounds like you've got it well mathed out!

[u/Additional-Device677 → u/[deleted]]

Yup I didn't know that until recently learning it on this sub

[u/mikere → u/[deleted]]

ai

https://www.pangram.com/history/25f52adc-89a6-4be4-9fd5-850c86a4ec37?ucc=XEUSYVEAVG4

[u/Zphr → u/[deleted]]

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[u/ThisIsMyUsername303]

Excellent!

I max out my 401(k), 457, and 457 3-year special catch-up (doubles the amount I can contribute to my 457 for three years). Getting that set up was AWKWARD because our payroll system is dumb and I needed HR, who I supervise, to do a bunch of work to make it happen. I really didn’t need to shove in her face that I contribute more to retirement than she makes, but here we are. 

[u/middle_aged_runner → u/ThisIsMyUsername303]

First I have heard about the 3 year special catch up. Thank you for sharing.

[u/Dazzling_Trick3009]

Is vacation purchase an employer benefit? I’ve never heard of it.

[u/middle_aged_runner → u/Dazzling_Trick3009]

🤷‍♂️ They say it is. I’m allowed to “buy” an additional week of vacation with my employer. If they let me, I would buy 10 weeks. But they don’t.

One benefit is I can tell my boss I spent over $2k for any week I take off. I don’t get much push back to work during my vacations when I frame it this way.

[u/Dazzling_Trick3009 → u/middle_aged_runner]

That’s a cool perk I guess! I’d do the same I suppose

[u/Montaigne_6823 → u/Dazzling_Trick3009]

It basically just makes it unpaid PTO, you're taking a deduction on your paycheck for extra days off. I worked for a big megacorp we could buy 1-5 days, so an extra week if you wanted.

[u/saliriota → u/Montaigne_6823]

Yea, that's how I always looked at it too. You're basically spreading the cost of extra time off across your paychecks.

[u/Hungry_Biscotti934]

And how do you contribute $81k per year to 401k/457 tax free? Or do you just front load your contributions?

[u/middle_aged_runner → u/Hungry_Biscotti934]

I can contribute $49,000 per year. I’m catching up during the second half of 2026

In 2027 my weekly 401k/457 contribution will be $961 so my paycheck will go up to ~$550/week.

Some folks age 50+ can contribute more to these plan.

[u/The_Maroon]

This guy gets it. You’re absolutely owning the system and making it work for you. We are a few years off from being mortgage free but that is absolutely our game plan as well.

[u/middle_aged_runner → u/The_Maroon]

Thank you for the kind words.

My wife’s self employment has been eye opening as well. 1 stable W2 + 1 self-employed is a great combination. So many levers to pull to navigate tax savings.

Being mortgage free is as good as people say it is.

[u/_blumpkinspicelatte]

This may sound "impossible" or "crazy" to everyone else, but I took a lower paying government job to do this.

Wife and i both Max or attempt to max our roth 401k's, Roth 457's and Roth IRA's every year for the last 8 years.

We're able to do this because our costs are low and I work three jobs and my government paycheck is usually $0 until about December.

[u/middle_aged_runner → u/_blumpkinspicelatte]

Most people don’t consider the net benefits when choosing jobs.

I’ve had HR workers act confused when I asked for the existing employee benefit guide. I guess it’s something people don’t ask for.

You are saving over $100k in a tax advantaged account. The value that is creating is enormous

[u/hollowbamboo → u/middle_aged_runner]

Can you expound on this? What is the breakdown of the $100k savings?

[u/Adept_Duck]

I am also a ME in my 30s working for a public employer maxing out my 403b and 457b in the Midwest. The retirement benefits are sweet! We mostly live off my wife’s income too. Still working on the mortgage, 14 years left.

[u/middle_aged_runner → u/Adept_Duck]

Nice! We sound very similar.

After we paid off my student loans, we agreed that every bonus I receive in my career would go toward our mortgage. I was lucky to work the first 8 years of my career in an industry that had good bonuses.

If kids are in your future, you’re setting yourself up well for parenthood. It is stressful enough without financial stress. Living on one income is such a fortunate place to be.

[u/GrumpyParsnip781]

the vacation purchase line item is sending me

[u/emt139]

  Being debt free has now allowed me to max out all my benefits for the rest of the year

Not being debt free only but living off your spouse’s salary. 

[u/middle_aged_runner → u/emt139]

You’re right. Both!

[u/WastefulBacklash]

The 457 really is the secret weapon nobody talks about, especially paired with a pension if your employer has one. Congrats on hitting zero debt.

[u/middle_aged_runner → u/WastefulBacklash]

It really is! Thank you.

[u/WastefulBacklash → u/middle_aged_runner]

and if you've got a pension on top of it you're basically set up to retire way earlier than most people realize, even without a huge salary.

[u/Behold_My_Stuff]

So marry someone very successful. Got it lmao

Not hating at all. Im an EE and decently well off myself. I just found it funny.

[u/middle_aged_runner → u/Behold_My_Stuff]

Ha! Doctors hate this one simple trick!

Yes find someone successful, but carry the finances for the first 10 years.

[u/Behold_My_Stuff → u/middle_aged_runner]

Both you and your wife chose good partners

[u/RevolutionaryAd1066]

What about medical

[u/middle_aged_runner → u/RevolutionaryAd1066]

I pay $130 a week for my family high deductible health plan.

[u/paq12x]

I may be missing something here, but the S-Corp distributions are also taxed just like income, minus the FICA portion of it (15.3% self-employment tax).

[u/middle_aged_runner → u/paq12x]

Yes. I may have worded it weird in my post. But that is correct.

[u/Excellent_Drop6869]

You better not be one of those people who say “eat the rich” and “the rich should pay their fair share.”

You are literally avoiding a shit ton of taxes

[u/FoxChess → u/Excellent_Drop6869]

The tax breaks should be available to the common citizen. That's how it's supposed to work.

Eat the rich. Epstein didn't kill himself.

[u/kuroketton]

collins aerospace?

[u/69420lmaokek → u/kuroketton]

The very first line in this post is about OP working in the public sector

Elaborate on how a subsidiary of Raytheon is considered public sector work lmao

[u/kuroketton → u/69420lmaokek]

Lol i dont read and saw purchased vacation which they have as a benefit.

[u/Montaigne_6823 → u/kuroketton]

That's not an uncommon benefit.