CALLING ALL READERS.... NEED SOME FINANCAL ADVICE

Apparently I can pay for my retirement using pre tax dollars after all. (I verified with HR when I dropped off my forms to buy my old retirement years from back when I was 16.) So, It's actually in my best interest NOT to pay the lump sum and lock in the cheaper rate by purchasing as soon as i'm vested (next year June) and take the pretty tax break.

I went ahead and did A LOT of math, but i figured out the “final cost” for the retirement purchase. The "Final Cost" does not include discounts I’d receive on STATE taxes… and since I’m in California… I can get up to 6-8% depending on income...

My Calculations assume:
GROSS: $43,000; AGI: 34,050.00 (minus standard deduction and personal exemption)
I used the current tax rates for 2008. Running with these numbers, I’d owe the government: $4,856.25 a year in taxes if I didn't have the retirement deductions.

• 2 years: $517.42 a check for a total of $26,905.84
  Tax Write off: $13,452.92 a year
  Taxable income becomes: 20,597.08
  Taxes owed: 1885.81+ 802.50= $2,688.31
  Save: 2,167.93 x2 years = $4,335.87
  FINAL COST: 22,569.97
• 3 years: $357.65 a check for a total of $27,896.70
  Tax Write off: $9,298.90 a year
  Taxable Income becomes: 24,751.10
  Taxes owed 2,508.94+802.50= $3,311.41
  Save 1544.83 x3 years = $4,634.50
  FINAL COST: 23,262.20
• 4 years: $277.98 a check for a total of $28,909.92
  Tax Write off: $7,227.48 a year
  Taxable Income becomes: $26,822.52
  Taxes owed 2819.62+802.50= 3622.128
  Save 1234.12 x4 years =4,936.48
  FINAL COST: 23,973.44
• 5 years: $230.36 a check for a total of $29,946.80
  Tax Write off: $5,989.36 a year
  Taxable Income becomes: $28,060.64
  Taxes owed 3005.34+ 802.50= 3807.84
  Save: 1048.40 x5 years = 5,242.02
  FINAL COST: 24,704.78
• 6 years: $198.76 a check for a total of $31,023.72
  Tax write off: $5,167.76 a year
  Taxable income becomes: $28,882.24
  Taxes owed 3128.58+ 802.50= 3,931.08
  Save 925.16 x6 years= 5,550.98
  FINAL COST: $25,472.74
• 7 years: $176.32 a check for a total of $32,090.24
  Tax Write off: $4,584.32 a year
  Taxable Income becomes: 29,465.68
  Taxes owed 3216.10+ 802.50= 4018.60
  Save: 837.64 x7 years= 5,863.53
  FINAL COST: $26,226.704
• 8 years: $159.59 a check for a total of $33,194.72
  Tax Write off: $4,149.34 a year
  Taxable income becomes: 29900.66
  Taxes owed 3281.34 +802.50= 4083.84
  772.40 x8 years= 6,179.20
  FINAL COST: 27,015.51
• 9 years: $146.68 a check for a total of $34,323.12
  Tax Write off: $3,813.68 a year
  Taxable income becomes: 30,236.32
  Taxes owed 3331.70+ 802.50 = 4134.198
  Save: 722.05 x9 years = 6,498.45
  FINAL COST: 27,824.65
• 10 years: $136.43 a check for a total of $35,471.80
  Tax Write off: $3,547.18 a year
  Taxable Income becomes: 30502.82
  Taxes owed 3,371.67 +802.50= 4174.17
  Save 682.07 x10 years = 6,820.77
  FINAL COST: 28,651.03
• 11 years: $128.12 a check for a total of $36,642.32
  Tax Write off: $3,331.12 a year
  Taxable income becomes: 30,718.88
  Taxes owed 3404.08+ 802.50= 4206.58
  Save 649.66 x11 years = 7,146.34
  FINAL COST: 29,495.97
• 12 years: $121.27 a check for a total of $37,836.24
  Tax Write off: $3,153.02 a year
  Taxable income becomes: 30,896.98
  Taxes owed 3430.78 + 802.50 =4233.29
  Save 622.95 x 12 years= 7,475.43
  FINAL COST: 30,360.80
• 13 years: $115.54 a check for a total of $39,052.52
  Tax Write off: $3,004.04 a year
  Taxable income becomes: 31,045.96
  Taxes owed 3453.14 +802.50= 4255.64
  Save 600.60 x 13 years =7,807.87
  FINAL COST: 31,244.64
• 14 years: $110.68 a check for a total of $40,287.52
  Tax Write off: $2,877.68 a year
  Taxable income becomes: 31,172.32
  Taxes owed 3472.098 +802.50= 4274.59
  Save 581.65 x14 years =8,143.12
  FINAL COST: 32,144.39
• 15 years: $106.52 a check for a total of $41,542.80
  Tax Write Off: $2,769.52 a year
  Taxable income becomes: 31,280.48
  Taxes owed 3488.32 +802.50= 4290.82
  Save 565.42 x15 years= 8,481.42
  FINAL COST: 33,061.38

What I'm leaning towards right now is taking it over 14 years... that way only 225 a month goes to out of my paycheck a month (which will keep me outta the 25% tax bracket) but will leave plenty of money to be saved incase of an emergency, for the house downpayment... or incase my contributions to my retirement change. [Currently i pay 1% pre tax--- the city pays 7% pretax. If this is ever going to change... it will be sooner rather then later with all the budget craziness that's been going on. ]

What do you think?