One of the most common questions we hear from clients at Colorado Financial Advisors is also one of the most important: "How much money do I need to retire comfortably in Colorado?" It's a crucial question that deserves more than a simple answer, because the right number for you depends on numerous factors unique to your situation, lifestyle goals, and vision for retirement.
Since 1990, we've been helping Colorado residents plan for retirement, and we understand the specific considerations that come with retiring in our state. From Denver's urban amenities to mountain town living, from healthcare costs to tax implications, Colorado offers incredible retirement opportunities but also presents unique financial considerations.
This comprehensive guide will help you understand how much you need to retire in Colorado, what factors influence that number, and how to create a realistic retirement savings target that supports the lifestyle you envision.
The General Rule of Thumb
Financial planners often cite general rules for retirement savings, and while these provide a starting point, they should never be your only consideration.
The 4% Rule
The traditional 4% rule suggests you can safely withdraw 4% of your retirement savings in your first year of retirement, then adjust that amount for inflation each subsequent year, with a reasonable expectation that your money will last 30 years.
Using this rule, if you want $60,000 per year in retirement income from your savings, you would need: $60,000 ÷ 0.04 = $1,500,000
The 25x Rule
A related guideline is the 25x rule, which suggests you need 25 times your desired annual retirement spending saved. Want $80,000 per year? You'd need $2,000,000 saved.
The 80% Rule
Another common guideline suggests you'll need 80% of your pre-retirement income to maintain your lifestyle in retirement. If you earn $100,000 before retirement, you'd aim for $80,000 per year in retirement income.
Important caveat: These rules provide helpful frameworks, but they're starting points, not destinations. Your actual needs depend on your specific circumstances, goals, and the unique aspects of living in Colorado.
Colorado-Specific Cost of Living Considerations
Colorado's cost of living varies significantly depending on where you choose to retire, and it's generally higher than the national average. Understanding these costs is essential for accurate retirement planning.
Housing Costs in Colorado
Housing represents the largest expense for most Colorado retirees, and costs vary dramatically across the state.
Denver Metro Area: The median home price in the Denver metro area hovers around $600,000 to $650,000, with significant variation by neighborhood. If you already own your home, your costs will primarily be property taxes, insurance, maintenance, and utilities. If you're renting or planning to buy, expect higher housing costs than many other states.
Mountain Communities: Popular mountain retirement destinations like Breckenridge, Vail, or Telluride often have even higher housing costs, with limited inventory driving prices up. However, smaller mountain towns like Salida, Durango, or Grand Junction may offer more affordable options while still providing mountain lifestyle benefits.
Eastern Plains and Rural Areas: Colorado's eastern plains and smaller rural communities offer significantly lower housing costs, often 40% to 60% less than Denver metro prices.
Property Taxes: Colorado benefits from the Taxpayer Bill of Rights (TABOR), which limits property tax increases. Property taxes in Colorado are relatively moderate compared to other states, but they still represent a significant ongoing expense. In the Denver metro area, expect annual property taxes of $3,000 to $8,000 or more, depending on your home's value.
Homeowners Insurance: Colorado's exposure to hailstorms, wildfires, and other natural events can make homeowners insurance more expensive than in other states. Budget $1,500 to $3,000 or more annually, depending on your location and coverage.
Healthcare Costs in Colorado
Healthcare represents one of the largest and most unpredictable retirement expenses, and Colorado's healthcare costs are slightly above the national average.
Medicare and Supplements: While Medicare provides base coverage starting at age 65, most retirees need supplemental coverage. A comprehensive Medigap policy in Colorado typically costs $150 to $350 per month per person, depending on age, location, and coverage level.
Pre-Medicare Coverage: If you retire before age 65, you'll need to bridge the gap until Medicare eligibility. Individual marketplace plans in Colorado can cost $500 to $1,500 or more per month per person, depending on age, location, and coverage level.
Out-of-Pocket Costs: Even with good insurance, budget for deductibles, copays, prescriptions, and services not covered by insurance. A reasonable estimate is $4,000 to $8,000 per year per person for out-of-pocket healthcare expenses.
Long-Term Care: While not everyone will need long-term care, planning for this possibility is prudent. In Colorado, assisted living facilities average $4,500 to $6,500 per month, while nursing home care can exceed $8,000 to $10,000 per month. Long-term care insurance or a dedicated savings strategy can help protect your retirement assets.
Daily Living Expenses in Colorado
Beyond housing and healthcare, consider these ongoing expenses:
Food and Groceries: Colorado's grocery costs are approximately 5% to 10% above the national average. A retired couple might spend $600 to $900 per month on groceries, plus additional amounts for dining out.
Transportation: If you maintain a vehicle, budget for car payments (if applicable), insurance, gas, maintenance, and registration. Colorado's higher elevation can be harder on vehicles, potentially increasing maintenance costs. Expect $600 to $1,000 or more per month for transportation expenses.
Utilities: Utility costs vary by location and home size. In the Denver area, budget $150 to $300 per month for electricity, gas, water, sewer, and trash. Mountain areas may have higher heating costs due to colder winters.
Entertainment and Lifestyle: This is where personal preferences create the most variation. Colorado offers incredible outdoor recreation, cultural amenities, dining, travel, and entertainment options. Your lifestyle choices will significantly impact your retirement budget.
Colorado Tax Considerations for Retirees
Colorado's tax structure offers some advantages for retirees, but it's important to understand the complete picture.
State Income Tax: Colorado has a flat income tax rate of 4.40% (as of 2026), which applies to most income sources including wages, investment income, and retirement account withdrawals.
Social Security Benefits: Colorado does not tax Social Security benefits, providing savings for retirees who receive Social Security income.
Pension Income: Colorado offers a pension and annuity income subtraction for taxpayers age 55 to 64 (up to $20,000) and age 65 and older (up to $24,000), reducing taxable income from these sources.
Property Tax: As mentioned, Colorado's property taxes are relatively moderate compared to other states, thanks in part to TABOR protections.
Sales Tax: Colorado's state sales tax is 2.9%, but when combined with local taxes, total sales tax can reach 8% to 11% in many areas.
Factors That Influence Your Retirement Number
Beyond Colorado-specific costs, several personal factors significantly impact how much you need to retire.
Your Desired Lifestyle
The lifestyle you envision in retirement has the single biggest impact on how much you'll need. Consider:
Travel Plans: Do you want to travel extensively, or are you content exploring Colorado's backyard? International travel, RV adventures, or frequent visits to see grandchildren all impact your budget.
Housing Choices: Will you downsize, age in place, or move to a different part of Colorado? Your housing decision affects not just your mortgage or rent, but also property taxes, utilities, maintenance, and insurance.
Hobbies and Activities: Golf memberships, season ski passes, country club dues, or other hobby expenses can add thousands to tens of thousands annually to your budget.
Part-Time Work: Many retirees choose to work part-time, either for income, purpose, or social connection. Even modest part-time income can extend your retirement savings.
Your Health and Longevity
Planning for a long retirement is better than running out of money. Consider:
Life Expectancy: A 65-year-old couple today has a good chance that at least one spouse will live into their 90s. Planning for a 30-year retirement is prudent.
Health Status: Your current health and family history should inform your healthcare cost projections and long-term care planning.
Activity Level: Active retirees who ski, hike, bike, and travel may have different expense patterns than those with more sedentary lifestyles.
Your Income Sources
Understanding all your retirement income sources helps you determine how much you need saved:
Social Security: Most retirees receive Social Security benefits. The average Colorado retiree receives approximately $1,800 to $2,000 per month, though your amount depends on your earnings history and claiming age.
Pensions: If you're fortunate enough to have a pension, this guaranteed income may reduce the amount you need saved. Calculate your expected monthly pension benefit.
Part-Time Work: As mentioned, many retirees work part-time. Even $1,000 to $2,000 per month can make a substantial difference.
Rental Income: If you own rental properties, this income stream can supplement your retirement savings.
Other Sources: Annuities, business income, or other income sources should be factored into your plan.
Your Current Age and Time Until Retirement
The closer you are to retirement, the less time you have for your investments to grow and compound. Consider:
Years Until Retirement: If you're 40 and planning to retire at 65, you have 25 years for compound growth. If you're 60, you have only 5 years.
Current Savings: Your existing retirement account balances and their projected growth impact how much additional savings you need.
Catch-Up Contributions: If you're 50 or older, you can make catch-up contributions to retirement accounts, allowing you to save more in your final working years.
Sample Retirement Budgets for Colorado
To make these concepts more concrete, let's look at sample retirement budgets for different lifestyle scenarios in Colorado.
Modest Lifestyle Budget
Annual Income Need: $50,000 to $60,000
- Housing (owned home): $15,000 (property tax, insurance, maintenance, utilities)
- Healthcare: $8,000 (Medicare premiums, supplements, out-of-pocket)
- Food: $8,000
- Transportation: $6,000
- Entertainment/Recreation: $4,000
- Personal/Miscellaneous: $6,000
- Taxes: $2,000
Savings Needed (using 4% rule): $1,250,000 to $1,500,000 (Assuming some Social Security income covers part of expenses)
Comfortable Lifestyle Budget
Annual Income Need: $80,000 to $100,000
- Housing: $24,000
- Healthcare: $10,000
- Food: $12,000
- Transportation: $10,000
- Travel: $8,000
- Entertainment/Recreation: $8,000
- Personal/Miscellaneous: $10,000
- Taxes: $8,000
Savings Needed (using 4% rule): $2,000,000 to $2,500,000 (Assuming Social Security provides $30,000 to $40,000 annually)
Affluent Lifestyle Budget
Annual Income Need: $120,000 to $150,000+
- Housing (premium location): $36,000
- Healthcare: $12,000
- Food and Dining: $18,000
- Transportation: $12,000
- Travel: $20,000
- Entertainment/Recreation: $15,000
- Charitable Giving: $10,000
- Personal/Miscellaneous: $15,000
- Taxes: $15,000
Savings Needed (using 4% rule): $3,000,000 to $4,000,000+
Important note: These are illustrative examples. Your actual needs will vary based on your specific circumstances, existing debt, housing situation, health, and lifestyle preferences.
Strategies to Help Reach Your Colorado Retirement Goal
If the numbers seem daunting, don't despair. Strategic planning and consistent action can help you reach your retirement goals.
Maximize Retirement Account Contributions
Take full advantage of tax-advantaged retirement accounts:
401(k) or 403(b): For 2026, you can contribute up to $24,500, plus an additional $8,000 catch-up contribution if you're 50 or older.
IRA Contributions: Contribute up to $7,500 annually ($8,600 if 50 or older) to traditional or Roth IRAs.
Employer Match: Always contribute enough to get your full employer match. It's free money that boosts your savings.
Develop a Strategic Investment Approach
Growing your retirement savings requires a thoughtful investment strategy:
Asset Allocation: Your mix of stocks, bonds, and other investments should reflect your age, risk tolerance, and time horizon.
Diversification: Spread your investments across different asset classes, sectors, and geographies to help manage risk. Diversification and asset allocation are methods used to help manage investment risk; they do not guarantee a profit or protect against investment loss.
Regular Rebalancing: Periodically adjust your portfolio to maintain your target allocation.
Fee Awareness: High investment fees can erode returns over time. Understanding and minimizing fees can help improve long-term growth potential.
Consider Your Housing Strategy
Housing decisions have enormous retirement implications:
Pay Off Your Mortgage: Entering retirement without a mortgage payment reduces your income needs.
Downsize Strategically: Moving to a smaller home or less expensive area can free up home equity and help reduce ongoing expenses.
Location Flexibility: Consider whether you need to stay in expensive areas like Denver or Boulder, or if more affordable Colorado communities could offer the lifestyle you want at a lower cost.
Plan for Healthcare Costs
Healthcare is too significant to leave to chance:
Health Savings Accounts (HSAs): If you have a high-deductible health plan, maximize HSA contributions. These accounts offer triple tax benefits and can be used for healthcare expenses in retirement.
Medicare Planning: Understand your Medicare options, supplemental coverage needs, and enrollment deadlines.
Long-Term Care Planning: Whether through insurance, self-funding, or a hybrid approach, have a plan for potential long-term care needs.
Optimize Social Security Claiming
When you claim Social Security significantly impacts your lifetime benefits:
Delay If Possible: For every year you delay claiming past full retirement age (up to age 70), your benefit increases by approximately 8%.
Coordinate with Your Spouse: Married couples should coordinate their claiming strategies to maximize household benefits over both lifetimes.
Consider Your Health and Longevity: If you expect a longer retirement, delaying benefits often makes financial sense.
Manage Taxes Efficiently
Smart tax planning can stretch your retirement dollars:
Tax Diversification: Having money in traditional (pre-tax), Roth (tax-free), and taxable accounts gives you flexibility to manage tax brackets in retirement.
Roth Conversions: Converting traditional IRA money to Roth during lower-income years may help reduce future taxes, particularly if you expect to be in a higher tax bracket later. This strategy may not be appropriate for everyone and can result in current‑year tax liability or other tax consequences. Individuals should consider their full tax situation and consult a qualified tax or financial professional before making a conversion decision.
Withdrawal Sequencing: The order in which you tap different accounts affects your tax bill and how long your money lasts.
Common Retirement Planning Mistakes to Avoid
Learning from others' mistakes can help you avoid costly errors:
Underestimating Healthcare Costs
Many retirees are surprised by healthcare expenses, even with Medicare. Plan conservatively and consider long-term care needs.
Claiming Social Security Too Early
While you can claim as early as 62, doing so permanently reduces your benefit. Unless you have compelling health or financial reasons, delaying often makes sense.
Not Accounting for Inflation
Even modest 3% annual inflation erodes purchasing power over a 30-year retirement. Your plan should account for rising costs.
Failing to Adjust Spending
Some retirees maintain pre-retirement spending levels without the income to support it. Be realistic about your budget and adjust as needed.
Ignoring Sequence of Returns Risk
The order in which you experience investment returns matters. Large losses early in retirement can impact how long your money lasts, even if you experience strong returns later.
Not Having a Backup Plan
Life rarely goes exactly as planned. Having flexibility and contingency plans helps you navigate unexpected challenges.
Working with a Financial Advisor
While this guide provides valuable information, there's no substitute for personalized retirement planning with an experienced financial advisor.
How Colorado Financial Advisors Can Help
At Colorado Financial Advisors, we've been helping Colorado residents plan for retirement since 1990. Our comprehensive approach includes:
Personalized Retirement Analysis: We help you determine your specific retirement savings target based on your lifestyle goals, existing assets, income sources, and Colorado cost of living considerations.
Investment Management: Our fee-based investment approach aligns our interests with yours and focuses on growing your wealth to help support your retirement goals.
Tax Planning Strategies: We help you optimize your tax situation, including Roth conversions, withdrawal strategies, and coordination with your tax professional.
Social Security Optimization: We analyze different claiming strategies to help you maximize your lifetime benefits.
Comprehensive Planning: Beyond just investments, we help coordinate various aspects of your financial life, including insurance, estate planning, and risk management.
Regular Reviews: Your retirement plan should evolve as your life changes. We provide ongoing guidance and adjustments to help keep you on track.
The Value of Professional Guidance
Retirement planning is complex, and the stakes are high. Working with experienced Denver financial advisors provides:
Objective Analysis: We help you see your situation clearly and make rational decisions based on facts, not emotions.
Experience: With decades of experience helping Colorado retirees, we understand the unique opportunities and challenges of retiring in our state.
Accountability: Regular meetings and progress reviews help you stay on track toward your goals.
Peace of Mind: Knowing you have a solid plan and professional guidance can help reduce anxiety and allow you to enjoy the journey to and through retirement.
The Bottom Line
So, how much do you need to retire in Colorado? The answer depends on your specific situation, but here are some general guidelines:
Minimum Comfortable Retirement: $1,000,000 to $1,500,000 in savings, supplemented by Social Security and possibly part-time work, can support a modest but comfortable Colorado retirement.
Comfortable Retirement: $1,500,000 to $2,500,000 allows for a comfortable lifestyle with occasional travel, hobbies, and financial security.
Affluent Retirement: $2,500,000 to $4,000,000+ provides flexibility for extensive travel, luxury expenses, and legacy planning.
Remember, these are general ranges. Your specific needs depend on your housing situation, healthcare needs, lifestyle expectations, and other personal factors.
The most important steps are:
- Start planning now, regardless of your age
- Save consistently and maximize retirement account contributions
- Invest strategically in growth opportunities appropriate to your timeline and personal situation
- Understand Colorado-specific costs and tax considerations
- Work with professionals who understand Colorado retirement planning
Take the Next Step
Planning for retirement in Colorado requires careful consideration of many factors, from housing costs and healthcare expenses to lifestyle goals and investment strategies. While the numbers might seem overwhelming, remember that retirement planning is a journey, not a destination. Each step you take toward understanding your needs and building your savings brings you closer to the retirement you envision.
At Colorado Financial Advisors, we're here to help you navigate this journey with confidence. Whether you're just starting to think about retirement or you're fine-tuning your plan as retirement approaches, our experienced team can provide the personalized guidance to help you move forward.
Ready to determine your retirement number and create a plan to help achieve it? Contact Colorado Financial Advisors today to schedule a consultation. Let's work together to build a retirement strategy designed to help you enjoy everything Colorado has to offer while supporting financial security and peace of mind.
Your retirement dreams may be within reach. Let's work together to help turn them into reality.
This information is provided for educational and informational purposes only and does not constitute financial, investment, tax, or legal advice. The examples, figures, and strategies discussed are for illustration only and may not be suitable for your specific situation. Financial planning and investment strategies involve risk, including the potential loss of principal, and outcomes will vary. No strategy or plan can guarantee results. Individuals should consult with qualified professionals regarding their specific circumstances before making financial decisions.
Securities offered through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way, Cincinnati, Ohio 45242 (513) 794-6794. Investment Advisory services offered through O.N. Investment Management Company. Estate Planning services provided in conjunction with your licensed legal professional. Colorado Financial Advisors does not provide legal, accounting or tax advice, but we do coordinate our services and work together with our clients’ legal and tax professionals. For specific assistance, the services of an appropriate professional should be sought.
