Should You Retire in Colorado?

Key Points

• Colorado's cost of living is above average -- and homes can be expensive.

• But there's a lot of natural beauty and recreational opportunities.

• The larger towns offer plenty of cultural activities, too.

• The $23,760 Social Security bonus most retirees completely overlook ›

Should you relocate for retirement, and move to Colorado? Well, maybe! Reasons to consider doing so include its natural beauty, with views of the Rocky Mountains available in many places, and a not-too-taxing climate. It's a great place for those who love to hike, ski, snowboard, fish, or bike, among other outdoor possibilities, and many of its towns offer cultural activities, too.

But consider many other factors as well. For one thing, Colorado's cost of living is 13% above average, per RentCafe.com, with housing 14% above average, utilities 14% lower, food 2% higher, healthcare 4% higher, and goods and services (such as entertainment and pool cleaning) 30% higher.

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Much depends on where in Colorado you live, though. Homes in Denver and surrounding towns can cost more than your current home, and traffic around Denver can get bad around rush hour. The average Colorado home value, as of 2025's second quarter, was about $570,492, well above the recent median U.S. home sale price of $410,800. Car insurance, meanwhile, recently averaged $3,171 annually in Colorado for full coverage, well above the national average of around $2,400.

Then there are taxes, even for retirees. Colorado is one of the few states that taxes Social Security benefits, though it does so with a light hand, exempting many people and incomes. Distributions from 401(k) and IRA accounts are also taxable, and there's a flat income tax rate of 4.4% (for 2025). While the state sales tax is only 2.9%, many towns levy their own tax, and the overall average sales tax in Colorado is 7.8%, per the Tax Foundation.

Go ahead and consider Colorado as a retirement destination, but be sure to do more research and consider all of the pros and cons -- such as the risk of wildfires in some regions and your adaptability to high-altitude living.

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