How to Save for Retirement in Denver

Retirement planning in Denver is more than just setting aside money—it’s about building a sustainable, resilient financial future tailored to the unique cost of living, economic trends, and lifestyle expectations of Colorado’s vibrant capital. With rising housing prices, a growing job market, and a population increasingly focused on work-life balance, saving for retirement in Denver requires a strategic, localized approach. Unlike more traditional retirement hubs, Denver offers a blend of urban convenience and mountain access that influences spending habits, investment opportunities, and long-term financial goals. This guide provides a comprehensive, step-by-step roadmap for residents of Denver to save effectively for retirement, incorporating local insights, tax advantages, investment tools, and real-world examples to ensure your golden years are as secure as they are fulfilling.

Step-by-Step Guide

1. Assess Your Current Financial Situation

Before you begin saving, you must understand where you stand financially. Start by gathering all your financial statements: bank accounts, investment portfolios, retirement accounts (like 401(k)s or IRAs), debts (credit cards, student loans, mortgages), and monthly income sources. In Denver, many residents carry higher housing costs than the national average—median home prices have exceeded $600,000 in recent years—so your housing expense will significantly impact your disposable income. Use a simple formula: Net Monthly Income – Monthly Expenses = Available Savings. Track every expense for at least 30 days using free budgeting apps or a spreadsheet. Categorize spending into essentials (housing, utilities, groceries), discretionary (dining, entertainment, travel), and debt payments. This baseline will reveal how much you can realistically allocate toward retirement each month.

2. Set Clear Retirement Goals

Define what retirement looks like for you. Do you plan to stay in Denver, downsize to a mountain town like Boulder or Evergreen, or relocate to a lower-cost state? Your retirement lifestyle directly affects how much you need to save. A common rule of thumb is to aim for 70–80% of your pre-retirement income, but in Denver, due to high healthcare and housing costs, many financial advisors recommend planning for 85–90%. Use online retirement calculators that factor in Colorado’s inflation rate, which has averaged 4.2% annually over the past five years, higher than the national average. Estimate your retirement age, life expectancy (considering Colorado’s high life expectancy of 79.5 years), and expected annual expenses. For example, if you plan to retire at 65 with $75,000 annual expenses adjusted for inflation, you may need $2.2–$2.8 million in today’s dollars, depending on investment returns and Social Security timing.

3. Maximize Employer-Sponsored Retirement Plans

Denver’s job market is robust, with major employers including tech firms, healthcare systems, and government agencies—all of which typically offer retirement plans. If your employer offers a 401(k), 403(b), or 457(b) plan, contribute at least enough to receive the full employer match. This is essentially free money. For example, if your employer matches 50% of your contributions up to 6% of your salary, you must contribute 6% to get the full 3% match. In 2024, the IRS allows a maximum contribution of $23,000 to a 401(k), with an additional $7,500 catch-up contribution for those 50 and older. Many Denver-based companies, such as DaVita, Charles Schwab, and the City and County of Denver, offer generous matching structures. Automate your contributions so they’re deducted from your paycheck before taxes. This reduces your taxable income and ensures consistency.

4. Open and Fund an IRA

If you’ve maxed out your employer plan or don’t have access to one, open an Individual Retirement Account (IRA). There are two main types: Traditional and Roth. In Colorado, there’s no state income tax on IRA withdrawals, making both options attractive. A Traditional IRA offers tax deductions on contributions now, with taxes paid in retirement. A Roth IRA requires after-tax contributions but allows tax-free growth and withdrawals—ideal if you expect to be in a higher tax bracket later. For 2024, you can contribute up to $7,000 annually ($8,000 if 50+). Consider opening your IRA with a low-cost provider like Vanguard, Fidelity, or Charles Schwab. Allocate your investments across diversified index funds to minimize fees and maximize long-term growth. In Denver’s growing economy, equities have historically outperformed other asset classes over 20+ year periods.

5. Take Advantage of Colorado-Specific Retirement Incentives

Colorado offers unique programs to support retirement savings. The state’s Colorado SecureSavings program is a state-sponsored automatic IRA for workers whose employers don’t offer a retirement plan. Starting in 2024, employers with five or more employees must either offer a retirement plan or enroll employees in Colorado SecureSavings. Contributions are made via payroll deduction, and funds are invested in a diversified portfolio managed by the state. While the contribution limit is capped at $7,000 annually (same as IRAs), the program removes barriers for gig workers, freelancers, and small business employees. Additionally, Colorado offers a state income tax deduction for contributions to qualified retirement accounts, which can reduce your taxable income by up to $6,000 for single filers and $12,000 for joint filers. Consult a Colorado-based CPA to ensure you’re claiming all available deductions.

6. Plan for Housing Costs in Retirement

Housing is the largest expense for most Coloradans. In Denver, homeownership is common, but property taxes have risen sharply—averaging 0.52% of home value, higher than the national average of 0.9% when adjusted for home prices. Consider your housing strategy: will you pay off your mortgage before retiring, or will you downsize? Many Denver retirees are opting to sell their larger homes and move into condos or townhomes in neighborhoods like Highland, Capitol Hill, or Lakewood, reducing maintenance and property tax burdens. Alternatively, some choose to relocate to mountain communities where property taxes are lower and cost of living is more manageable. If you plan to rent in retirement, factor in Denver’s rental market, which remains tight, with average one-bedroom rents exceeding $2,200/month. Budget for potential rent increases and property insurance hikes, especially as climate-related risks (wildfires, hailstorms) influence premiums.

7. Factor in Healthcare and Long-Term Care

Healthcare costs in Colorado are among the highest in the Mountain West. Medicare Part B premiums in 2024 are $174.70/month for most beneficiaries, but supplemental plans (Medigap) and prescription drug coverage (Part D) can add hundreds more. Colorado has a higher-than-average rate of chronic conditions like heart disease and diabetes, partly due to aging demographics and altitude-related health factors. Plan for out-of-pocket medical expenses, which the Employee Benefit Research Institute estimates average $315,000 for a 65-year-old couple retiring in 2024. Consider purchasing long-term care insurance before age 60, when premiums are lower and health qualifications are easier to meet. Alternatively, explore hybrid policies that combine life insurance with long-term care benefits. Some Denver residents also use Health Savings Accounts (HSAs)—if enrolled in a high-deductible health plan—as a triple-tax-advantaged retirement tool: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. After age 65, HSA funds can be used for any purpose without penalty (though non-medical withdrawals are taxed as income).

8. Diversify Your Investment Portfolio

Don’t rely solely on your 401(k) or IRA. Build a diversified portfolio that includes stocks, bonds, real estate, and alternative assets. In Denver, many retirees invest in local real estate through REITs (Real Estate Investment Trusts) or rental properties. The Denver metro area has seen consistent appreciation over the past decade, with an average annual increase of 6.8% from 2014–2023. However, rental markets have softened slightly in 2023–2024 due to higher interest rates, so focus on properties in high-demand areas like Aurora, Thornton, or Westminster. Consider low-cost index funds that track the S&P 500 or total market ETFs for broad exposure. Avoid chasing “hot” stocks or speculative crypto investments—retirement savings require stability. Rebalance your portfolio annually to maintain your target asset allocation (e.g., 60% stocks, 40% bonds). Use dollar-cost averaging to invest consistently, regardless of market conditions, which smooths out volatility over time.

9. Plan for Social Security Strategically

Social Security is a critical pillar of retirement income, but timing your claim can significantly impact your lifetime benefits. In Denver, where many residents work in physically demanding jobs (construction, hospitality, healthcare), some claim benefits early at age 62. However, doing so reduces your monthly benefit by up to 30%. Waiting until your full retirement age (67 for those born in 1960 or later) increases your benefit to 100%. Delaying until age 70 increases it by 8% per year beyond full retirement age—up to 124% of your primary insurance amount. If you’re in good health and expect to live beyond 80, delaying is usually the smarter move. If you continue working while claiming benefits before full retirement age, your earnings may temporarily reduce your payments. Use the Social Security Administration’s online calculator to model different claiming strategies based on your earnings history and life expectancy.

10. Create a Withdrawal Strategy

Once retired, you’ll need to withdraw money systematically without depleting your savings too quickly. The 4% rule is a widely used guideline: withdraw 4% of your retirement portfolio in the first year, then adjust for inflation annually. For example, with a $1.5 million portfolio, you’d withdraw $60,000 in year one. However, in a high-cost city like Denver, this may not be sufficient. Many retirees use a dynamic withdrawal strategy, adjusting based on market performance. Prioritize withdrawing from taxable accounts first, then tax-deferred accounts (Traditional IRA, 401(k)), and finally Roth accounts, which have no required minimum distributions (RMDs) during your lifetime. Be aware that RMDs begin at age 73 (as of 2024) and can push you into a higher tax bracket. Plan ahead by doing Roth conversions in lower-income years to reduce future RMDs.

Best Practices

Start Early, Even with Small Amounts

Time is your greatest ally in retirement savings. A 25-year-old who saves $300 per month at a 7% annual return will have over $700,000 by age 65. Someone who starts at 35 with the same monthly amount will have only $330,000. Even if you can only afford $50 per month, start now. Automate contributions so saving becomes invisible. In Denver, where lifestyle inflation is common (expensive coffee, outdoor gear, weekend getaways), setting up automatic transfers to a retirement account the day after payday helps avoid the temptation to spend.

Minimize Debt Before Retirement

Entering retirement with debt—especially high-interest credit card debt—can derail your financial security. In Denver, the average credit card balance is $6,200, and interest rates average 21%. Prioritize paying off high-interest debt using the avalanche method (highest interest rate first) or snowball method (smallest balance first). Avoid taking on new debt as you approach retirement. If you have a mortgage, aim to pay it off before retiring. If not, ensure your monthly payment is less than 25% of your projected retirement income.

Build an Emergency Fund

Before aggressively saving for retirement, establish an emergency fund with 3–6 months of living expenses. In Denver, unexpected costs like hail damage to your car, plumbing emergencies, or sudden job loss can occur. Keep this fund in a high-yield savings account (HYSA) with FDIC insurance. Many local credit unions, like Denver Federal Credit Union or Colorado Credit Union, offer HYSAs with rates above 4.5% APY—far better than traditional banks. This fund protects your retirement savings from being raided during crises.

Review and Adjust Annually

Life changes. A raise, a new child, a job change, or a health issue can alter your retirement plan. Review your retirement strategy at least once a year. Update your beneficiary designations, rebalance your portfolio, adjust your contribution amounts, and reassess your retirement goals. Use your birthday or tax season as a reminder. Denver’s rapid growth means housing, healthcare, and tax policies are constantly evolving—stay informed.

Consider Working Longer or Part-Time in Retirement

Many Denver retirees choose phased retirement—reducing hours, consulting, or working part-time in fields they love. Whether it’s teaching yoga at a local studio, volunteering at the Denver Botanic Gardens, or consulting in tech, part-time work can extend your savings, delay Social Security claiming, and provide social engagement. The Colorado Department of Labor and Employment reports that over 25% of adults 65+ remain in the workforce, the highest rate in the Mountain West.

Protect Against Inflation

Colorado’s inflation rate has outpaced the national average in recent years due to housing, energy, and labor costs. Ensure your portfolio includes inflation-protected assets like Treasury Inflation-Protected Securities (TIPS), real estate, and dividend-paying stocks. Avoid keeping too much cash in low-yield accounts. Even a 3% annual inflation rate can erode purchasing power by nearly 50% over 25 years.

Engage in Community Financial Literacy Resources

Denver has a thriving network of free financial education programs. Organizations like Financial Health Network, Denver Public Library’s Financial Wellness Workshops, and the University of Colorado’s Extension Office offer free seminars on retirement planning, estate planning, and debt management. Attend at least one per year. Knowledge is power—and in a city with so many financial services providers, being informed helps you avoid predatory products.

Tools and Resources

Online Retirement Calculators

Use these free, reliable tools to model your retirement needs:

• Bankrate Retirement Calculator – Adjusts for inflation, Social Security, and taxes
• Vanguard Retirement Nest Egg Calculator – Models different withdrawal strategies
• Social Security Administration Retirement Estimator – Provides personalized benefit projections
• Colorado SecureSavings Calculator – Estimates growth under the state program

Investment Platforms

Choose low-cost, user-friendly platforms:

• Fidelity – Offers free financial planning tools and access to Colorado-based advisors
• Vanguard – Low expense ratios on index funds, ideal for long-term investors
• Charles Schwab – No-fee IRAs and robust research tools
• SoFi Invest – Great for beginners with automated portfolios

Local Financial Advisors

Consider working with a fee-only fiduciary advisor based in Denver. These professionals are legally obligated to act in your best interest. Look for Certified Financial Planners (CFPs) through the Financial Planning Association of Colorado or the National Association of Personal Financial Advisors (NAPFA). Avoid commission-based advisors who push high-fee products. Many offer initial consultations for free.

Books and Podcasts

Deepen your knowledge with these resources:

• Book: “The Simple Path to Wealth” by JL Collins – Clear, no-nonsense investing advice
• Book: “Retire Inspired” by Chris Hogan – Tailored for those in high-cost areas
• Podcast: “The Dave Ramsey Show” – Debt reduction and budgeting fundamentals
• Podcast: “The Retirement Answer Man” – Focuses on Social Security and healthcare strategies
• Colorado-Specific: “Colorado Money Matters” by Rocky Mountain PBS – Local financial news and interviews

Government and Nonprofit Resources

Take advantage of free, local support:

• Colorado SecureSavings – coloradosavers.org
• Denver Public Library Financial Literacy – Free workshops and one-on-one coaching
• Area Agency on Aging – Denver Metro – Offers retirement planning guides and caregiver support
• Colorado Department of Regulatory Agencies (DORA) – Verify advisor licenses and report fraud

Real Examples

Example 1: Maria, 32, Software Engineer

Maria earns $110,000/year in Denver. Her employer offers a 401(k) with a 100% match up to 5%. She contributes 7% of her salary ($7,700/year), getting the full $5,500 match. She also opens a Roth IRA and contributes $7,000 annually. She invests in a target-date fund aligned with her 2055 retirement. She has $25,000 in student loans and pays $2,800/month in rent. She plans to buy a condo in five years and pay it off by 55. Maria saves $14,700/year. Assuming a 7% annual return, she’ll have $1.8 million by age 65. She’ll also receive an estimated $32,000/year in Social Security. With conservative spending, she’ll comfortably retire in Denver.

Example 2: James and Linda, 58, Teachers

James and Linda have been contributing to Colorado’s PERA (Public Employees’ Retirement Association) for 30 years. They each have $450,000 in PERA accounts and plan to retire at 62. They also have $200,000 in IRAs invested in index funds. Their home is paid off, and they live in Lakewood. They plan to downsize to a smaller home in Golden after retirement. Their combined PERA pension will be $65,000/year. They’ll delay Social Security until 70, adding $38,000/year. With $20,000/year from IRA withdrawals, their total income is $123,000. They’ve budgeted $90,000/year for living expenses, including travel and healthcare. They’ve also purchased a long-term care policy that covers 80% of assisted living costs. Their plan is secure and sustainable.

Example 3: Raj, 40, Freelance Photographer

Raj has no employer plan and earns $75,000/year inconsistently. He opens a Solo 401(k) and contributes $20,000 annually (the maximum for self-employed individuals in 2024). He also contributes $7,000 to a Roth IRA. He invests in a diversified ETF portfolio. He lives in a rented apartment in RiNo and plans to buy a small home in Boulder by 50. He uses Colorado SecureSavings as a backup. He tracks expenses meticulously and uses a 50/30/20 budget (50% needs, 30% wants, 20% savings). At a 7% return, his Solo 401(k) alone will grow to $1.4 million by 65. He plans to work part-time as a photography instructor in retirement to supplement income and stay active.

FAQs

How much should I save each month for retirement in Denver?

Most financial experts recommend saving 15–20% of your gross income for retirement. In Denver, where housing and healthcare are expensive, aiming for 20% is prudent. For example, if you earn $80,000/year, save $1,333/month. Adjust based on your goals and current savings.

Is it better to rent or buy a home before retiring in Denver?

Buying is generally better if you plan to stay long-term, as home equity builds wealth and protects against rent inflation. However, if you’re unsure about staying in Denver or want flexibility, renting may be better—especially with high property taxes and maintenance costs. Consider your risk tolerance and lifestyle.

Can I retire early in Denver?

Yes, but you’ll need significantly more savings. Retiring at 55 instead of 67 means your money must last 30+ years instead of 20. You’ll also face penalties on early 401(k) withdrawals before 59½ unless you use a 72(t) distribution strategy. Plan for healthcare costs before Medicare eligibility at 65.

Does Colorado tax retirement income?

No. Colorado does not tax Social Security benefits, and it offers a deduction for retirement income up to $24,000 for seniors (age 65+). Traditional IRA and 401(k) withdrawals are partially deductible. Roth IRA withdrawals are tax-free. This makes Colorado one of the most tax-friendly states for retirees.

How does inflation affect retirement savings in Denver?

Inflation in Denver has averaged 4.5% annually over the past five years, higher than the national average. This means your expenses will rise faster than in other cities. Your retirement savings must grow faster than inflation. Invest in assets like stocks and real estate that historically outpace inflation.

Should I use a financial advisor in Denver?

If you’re unsure about investment choices, tax strategies, or Social Security timing, a fee-only fiduciary advisor is worth the cost. Look for someone with experience in Colorado’s unique retirement landscape. Avoid commission-based advisors who push high-fee products.

What happens if I lose my job before retirement?

Use your emergency fund first. Consider COBRA for health insurance or enroll in a Colorado Marketplace plan. If you’re over 55, you may qualify for penalty-free withdrawals from your 401(k) under the “Rule of 55.” Don’t panic—many Denver residents pivot to freelance or part-time work during transitions.

Can I save for retirement if I’m self-employed in Denver?

Absolutely. Options include a Solo 401(k), SEP IRA, or SIMPLE IRA. You can contribute up to $69,000 in 2024 (Solo 401(k)) if your income allows. Combine this with a Roth IRA for tax diversification. Use Colorado SecureSavings as a backup if needed.

Conclusion

Saving for retirement in Denver is not just a financial task—it’s a lifestyle choice that requires foresight, discipline, and local awareness. From navigating high housing costs to leveraging Colorado’s tax advantages and unique retirement programs, every decision you make today shapes the freedom and comfort of your future. By following this guide—starting early, maximizing employer plans, investing wisely, planning for healthcare, and staying informed—you’re not just saving money; you’re building a life that reflects your values and aspirations. Whether you dream of hiking the Flatirons at 70, enjoying a quiet morning coffee in Cherry Creek, or traveling the world after decades of hard work, your retirement is within reach. Start today. Stay consistent. And remember: the best time to plant a tree was 20 years ago. The second-best time is now.