Rising health care costs and disappearing pensions have led to nationwide unease about retirement savings, and while local experts say the Pikes Peak region is in better shape than some parts of the country, Colorado residents are not immune to those concerns.

According to AARP’s Colorado Retirement Security Survey, released in April, registered voters in Colorado, ages 25 to 64, do not feel financially prepared for retirement.

Nearly all of that group — 90 percent ages 35 and older — wish they had more money saved for retirement. About 35 percent of younger voters do not believe they will be able to save enough money for their retirement years, according to the survey.

Those fears are not unfounded, experts say. The economic downturn of 2008 meant retirement pensions began going away across the board, said Dustin Bench, a financial planner with Altus Wealth Group in Colorado Springs.

“A lot of the larger corporations stopped contributing to pensions, which isn’t an automatic savings. It’s something that employees don’t get any control over, which might have been a good thing,” Bench said. “They had security down the road on top of Social Security, where more of that responsibility is put on employees’ shoulders and not a lot of education went along with it.”

Income increases did not accompany the decrease in pensions, Bench added.

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“We didn’t see a lot of income increase when pensions went away — they just went away,” he said. “It’s a strain a lot of people didn’t feel right away because they were 20, 30 years away from retirement.”

The average person in the United States retires at age 63, and the average life expectancy for men and women combined is 79 years old — meaning the average American needs a minimum of $1.5 million to retire comfortably, said Tatiana Bailey, executive director of the UCCS Economic Forum.

“The general rule of thumb these days, when individuals are living longer and health care costs are continuing to escalate out of reach, is to have about $1 million for every 12 years of retirement,” Bailey said. “It’s astounding how much the average person needs.”

Skyrocketing health care costs and longer lifespans only further complicate the situation, Bailey said. About 85 percent of lifetime health care costs for the average person are spent in the last month of life, she said.

“We are living longer and health care is ridiculously expensive,” Bailey said. “The culture in the United States is that if people get sick, you do everything you possibly can to keep them alive. We try to prolong life as much as we can, but that costs often hundreds of thousands of dollars — sometimes millions. It adds up, and imagine people who only have Medicare Part A. It’s a tricky situation for seniors.”

According to a report issued in 2018 by the Colorado Health Institute, nearly a quarter-million Coloradans are facing their retirement years without an end-of-life plan, which is associated with fewer hospitalizations, a lower likelihood of dying in the hospital, and increased use of hospice care.

Bailey also attributed the financial uncertainty surrounding retirement to student loan debt, a problem that has only increased in the last 20 years, she said. College graduates can spend as long as 30 years paying off the debt they incurred while pursuing their degree, Bailey said.

“What do you think that is going to do to their retirement?” she said. “When those Millennials start getting 65, 70 years old, they are even less well prepared because of additional burdens, and they haven’t stockpiled much money.”

Bailey said this especially rings true for those with liberal arts degrees, an increasing number of whom are unable to find employment after graduating from college.

“For many non-STEM majors, it’s very hard to get a job in their field, so they typically don’t because those jobs don’t exist anymore,” Bailey said. “They tend to take jobs not in their field that are not high-paying. With student loans, these kids aren’t really thinking about retirement.”

COLORADO OUTLOOK

Colorado’s demographics give its residents a slight advantage over those in other states, Bailey said. The Centennial State was ranked the fifth-best-educated in the nation in 2018 by finance website WalletHub.

Specifically, El Paso County has a higher percentage of residents than the rest of the state whose income bracket falls between $100,000 to $150,000, Bailey said. The U.S. Census Bureau estimates the median household income in El Paso County in 2017 was more than $62,000 — almost $1,000 higher than the national average the same year.

A strong military presence also works in the Pikes Peak region’s favor, Bench said. Retired military members often have access to benefits that are not available to the general public, and even seemingly small breaks can make a difference over time, he said.

The GI Bill provides educational assistance to service members, veterans and their dependents, so it’s easier to pay for college, Bench said.

Military members also can access health insurance for long-term care through the Department of Defense, he said, about half the cost for an individual without those benefits.

“They have pensions and lower health care costs through Tricare,” Bench said. “It all comes to a culmination. They can get discounts … which seems like an insignificant thing, but when you’re putting together a monthly budget and you have to do home repairs, and Home Depot offers a 10 percent savings for veterans, that can go a long way.”

Because retired military members often do consulting work while drawing their pensions, a higher percentage of Coloradans have two incomes, Bailey said.

Still, these numbers by no means indicate all Coloradans can retire comfortably, she said.

“We have a higher-than-average income and a more educated population. Shouldn’t we be better off? Not necessarily,” Bailey said. “The truth is, across the entire country, individuals do not have enough for retirement.”

Skyrocketing housing prices also eat into employees’ retirement savings, particularly in the Pikes Peak region, Bench said.

Realtor.com ranked Colorado Springs as last November’s sixth-hottest housing market, with a median list price of $367,000 and a median time on market of 50 days.

“Housing is a problem all over, but Colorado and the Front Range especially are having more of a housing crisis,” Bench said. “More and more of what people are spending money on is basic housing needs, so they don’t feel they can save money on things like retirement. Our income isn’t high enough to support a lot of people with housing costs — that’s all there is to it.”

HOW TO PREPARE

Lack of budgeting is another contributor to financial unease over retirement, and one that is easily remedied, Bench said.

“Most of the time when we sit down with individuals, we can find funds that are going out the door and they don’t know why. So we figure out how they can start to save on an incremental basis and increase over time,” he said. “That creates more momentum and we end up seeing people do well after they start.”

Bench always recommends clients establish a 401K with an automatic annual increase to eliminate the burden of deciding whether or not to up their savings each year.

“When we have to make a decision every single time, it breaks down,” Bench said. “When it’s automatic, you’ve already made that decision when you’re of sound mind.”