Should you retire in Colorado?

Should you retire in Colorado? You can probably think of a few reasons why you might want to do this. Let me review a few — along with a few caveats.

For starters, there’s a lot to like about Colorado as a place to live. It features a wealth of natural beauty – far beyond the impressive Rocky Mountain National Park. There are plenty of state and national parks, ski resorts, forests and lakes that offer a multitude of outdoor recreational activities – such as skiing, hiking, biking, camping, fishing and golf. Culture seekers can enjoy live theater, film festivals and museums.

Image course: Getty Images.

The climate is also a plus. Summers can get hot, but evenings tend to get very cold, and many winter days are not that cold. Colorado averages 300 sunny days per year and low humidity. Retirees may be satisfied with healthcare offerings. According to MedicareGuide.com, Colorado was recently ranked the eighth best state for health care for seniors. The economy is also strong and the locals are friendly.

It’s not all mountain peaks and rainbows, though. Colorado has a relatively high cost of living — about 120 percent of the national average, according to BestPlaces.net. Of course, costs can also depend on where you live in Colorado, but in general, expect housing costs to be considerably higher than average, although healthcare and utility costs may be below average.

Other disadvantages include heavy traffic in some urban areas and occasional natural disasters such as fires and floods.

Taxation can be an important factor for those choosing a retirement location. From this point of view, the news is mixed. The state has a flat income tax rate of 4.4%, but those over 55 can deduct $20,000 to $24,000 of their retirement income. Distributions from retirement accounts such as IRAs and 401(k)s are taxable, and pensions are partially taxable. Social Security benefits are completely exempt from Colorado state taxes once you turn 65.

As you plan for retirement — and we all need a good retirement plan — consider Colorado if you’re open to moving. And if you already live there, good for you!