Colorado Retirement Planning

Retirement Planning in Denver: A Guide for Colorado Savers

Retirement planning in Denver involves coordinating savings, investments, Social Security, and tax strategy to build a retirement income plan. Colorado residents benefit from a flat 4.4% state income tax rate, no taxation of Social Security benefits for those 65 and older, and expanded pension and annuity income subtractions beginning in 2026.

Whether you are a decade from retirement or already drawing from your portfolio, understanding the Colorado-specific factors that shape your retirement income can help you make more informed decisions. Our team at The Stellarix Group brings together investment management, wealth management, risk planning, and tax-aware strategy to help Denver-area savers navigate this journey.

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Colorado Tax Advantages

Colorado Retirement Tax Advantages for 2026

Colorado is often described as relatively tax-friendly for retirees, and 2026 brings a notable change that may benefit many retirement savers. The state applies a flat income tax rate and offers subtractions for Social Security and pension income that can reduce the amount of retirement income subject to state tax. Understanding how these rules apply to your situation may help you plan withdrawals more effectively, though individual results vary based on income, filing status, and age.

Retirement Income Type	Colorado Tax Treatment (2026)
Social Security (age 65 and older)	Fully subtracted from Colorado taxable income
Social Security (ages 55 to 64, within AGI limits)	Fully subtracted if Colorado AGI is at or below $75,000 (single) or $95,000 (married filing jointly)
Pension, annuity, IRA, 401(k) income (age 55 and older)	Starting in 2026, the full amount included in federal taxable income may be subtracted; previous caps of $20,000 (ages 55 to 64) and $24,000 (65 and older) have been removed
Roth IRA distributions (qualified)	Generally not taxed at the federal or state level
State income tax rate	Flat 4.4% on Colorado taxable income

Source: Colorado Department of Revenue, "Information for Retirees" (tax.colorado.gov, updated March 2026); Colorado Senate Bill 25-136. Financial data research via Perplexity Finance (as of July 2026). Figures reflect rules effective for tax year 2026. Individual tax outcomes vary; consult a tax professional for advice specific to your situation.

Public Employees

Planning Around Colorado PERA Benefits

The Colorado Public Employees' Retirement Association (PERA) provides retirement, disability, and survivor benefits to employees of the State of Colorado, school districts, local governments, and many higher-education institutions. PERA operates a hybrid system that combines a defined benefit pension with a defined contribution plan, and for most members, PERA serves as a substitute for Social Security coverage through their public employment.

PERA benefits are calculated based on highest average salary, years of service, and age at retirement, with the formula varying by division and membership start date. For July 2026, eligible PERA benefit recipients are scheduled to receive a 1.0% annual benefit increase. Understanding how PERA benefits interact with other retirement income sources, including any Social Security from private-sector work, is an important part of retirement planning for Colorado public employees.

Key PERA Considerations

Hybrid system with defined benefit pension and defined contribution plan
Covers state, school district, local government, and judicial employees
Most members do not participate in Social Security through PERA employment
Voluntary PERA Plus 401(k) and 457 plans available for additional savings
2026 annual benefit increase: 1.0% for eligible recipients

Source: Colorado PERA 2025-26 employer manual and annual report materials (copera.org, as of 2026). Funded status approximately 69% as of 2026.

Income Strategies

Retirement Income Strategies for Denver Savers

Building a retirement income plan involves coordinating multiple income sources, each with its own tax implications and timing considerations. The goal is to create a sustainable withdrawal strategy that aligns with your expenses while managing tax exposure and market risk. Every strategy involves trade-offs, and what works for one household may not be appropriate for another.

Social Security Timing

The age at which you claim Social Security affects your monthly benefit amount. Claiming at 62 reduces benefits, while delaying past full retirement age may increase them. For Colorado residents, Social Security is not taxed at the state level for those 65 and older, which may influence when and how you integrate benefits into your income plan.

Tax-Aware Withdrawals

Coordinating withdrawals across taxable, tax-deferred, and tax-free accounts may help manage your overall tax burden. Colorado's expanded pension and annuity subtraction for 2026 creates additional planning considerations for how and when to draw from tax-deferred accounts. Results vary by individual tax situation and may involve trade-offs.

Pension and Annuity Integration

If you receive pension income, including PERA benefits, integrating it with other income sources is an important planning step. Colorado's 2026 cap removal on the pension and annuity subtraction may reduce the state tax impact of these income sources, though federal taxation and overall income planning still apply.

2026 RMD Rules

Required Minimum Distribution Rules for 2026

Required minimum distributions (RMDs) are mandatory withdrawals from certain tax-deferred retirement accounts that generally begin at a specific age. The SECURE Act 2.0 raised the RMD starting age in stages, and the rules that apply to you depend on your birth year. Failing to take a full RMD may result in tax penalties, though SECURE 2.0 reduced the penalty from 50% to 25% of the shortfall, with a potential reduction to 10% if corrected within two years.

Birth Year	RMD Starting Age	2026 Considerations
1950 or earlier	72	2026 RMD must be taken by December 31, 2026
1951 to 1959	73	Those turning 73 in 2026 may delay first RMD to April 1, 2027 (two distributions in 2027)
1960 or later	75 (effective 2033)	No RMD obligation for 2026

Roth Account Exemptions

Roth 401(k) and 403(b) accounts are exempt from lifetime RMDs under SECURE 2.0. Original-owner Roth IRAs are not subject to RMDs during the owner's lifetime. Beneficiaries of inherited accounts may still face distribution requirements.

Still-Working Exception

If you are still working past age 73 and do not own 5% or more of the employer, some 401(k) plans may allow delaying RMDs from that specific plan until retirement, subject to plan terms and IRS rules.

Source: IRS Publication 590-B (irs.gov, as of 2026). Financial data research via Perplexity Finance (as of July 2026). RMD rules are complex; consult a tax professional for guidance specific to your situation.

Our Services

How The Stellarix Group Supports Your Retirement Goals

Retirement planning is not a single decision but an ongoing process that touches investments, taxes, insurance, and estate strategy. Our team brings together professionals with credentials including CFP, CFA, ChFC, CLU, CIMA, AIF, and CLTC to coordinate these areas within one holistic plan. We work with pre-retirees, retirees, and multi-generational families in Denver and across all 50 states.

Investment Management

Our investment management services seek to align your portfolio with your retirement timeline, income needs, and risk tolerance. We employ a disciplined, data-driven approach to asset allocation, recognizing that market conditions fluctuate and no strategy can assure specific outcomes.

Risk Management and Insurance

Retirement planning includes preparing for risks such as premature death, illness, or outliving your savings. Our risk management services address life insurance, long-term care, and disability coverage, coordinated with your overall plan. Insurance products involve costs and potential trade-offs that should be evaluated carefully.

Estate and Legacy Planning

For many retirees, planning how wealth transfers to the next generation is as important as building it. Our estate planning strategies coordinate with attorneys and the MassMutual Trust Company to address trusts, beneficiary designations, and charitable giving. Estate planning involves legal and tax considerations that vary by individual circumstances.

Learn more about our comprehensive approach on our Denver financial advisor page.

Common Questions

Frequently Asked Questions About Retirement Planning

These questions reflect common search queries from people exploring retirement planning in Denver and beyond. The answers below are educational and do not constitute personalized tax, legal, or investment advice.

What Is the $1,000 a Month Rule for Retirees?

The $1,000 a month rule is a general savings guideline suggesting that consistently contributing $1,000 per month to retirement accounts over a working career may help build a meaningful retirement nest egg. The actual amount you need depends on your retirement goals, expected expenses, Social Security benefits, and other income sources. This rule of thumb does not account for individual circumstances, investment performance, or inflation, and results vary considerably from person to person.

How Long Will $500,000 Last Using the 4% Rule?

The 4% rule is a commonly cited withdrawal guideline suggesting that withdrawing 4% of a portfolio in the first year of retirement, then adjusting that amount for inflation in subsequent years, may provide income for approximately 30 years. With $500,000 in savings, a 4% initial withdrawal equals $20,000 per year. However, actual portfolio longevity depends on market conditions, inflation, withdrawal timing, and other income sources. The 4% rule is a starting point for discussion, and many retirees adjust their withdrawal rate based on changing circumstances.

How Much Should You Pay for Retirement Planning?

Retirement planning fees vary depending on the advisor and the scope of services. Common structures include fee-based arrangements, which may combine advisory fees with potential insurance commissions, and fee-only models, which charge a set percentage of assets under management or a flat retainer. The Stellarix Group operates on a fee-based model through MML Investors Services, LLC (MassMutual). Specific fees are discussed during a consultation, as they depend on the complexity of your financial situation and the services you select.

Is $200,000 Enough to Work With a Financial Advisor?

There is no universal asset threshold for working with a financial advisor. Some advisors set account minimums, while others work with clients at various asset levels. The value of working with an advisor often depends less on your current portfolio size and more on whether you need help coordinating investments, taxes, insurance, and estate planning. The Stellarix Group does not publicly disclose specific account minimums; we encourage you to schedule a consultation to discuss whether our services align with your needs.

Can I Retire at 62 With $400,000 in a 401(k)?

Whether $400,000 can support retirement at age 62 depends on many factors, including your expected annual expenses, Social Security claiming strategy, healthcare costs before Medicare eligibility at 65, withdrawal rate, and other income sources. Retiring before full retirement age may reduce Social Security benefits, and early withdrawals from tax-deferred accounts before age 59 and a half may incur penalties unless exceptions apply. A financial professional can help evaluate your specific situation and explore options for managing income, healthcare, and tax considerations.

Start Planning Today

Begin Your Retirement Plan With a Denver Team You Trust

Retirement planning is a journey, and having a coordinated team can make the path clearer. Whether you are accumulating savings, approaching retirement, or already managing withdrawals, we are here to help you navigate the decisions ahead. Schedule a consultation with The Stellarix Group to discuss your retirement planning needs.