Is phoenix a good place to retire

If you’re like most people trying to map out where to live during their golden years, it’s likely that the state of Arizona is one state you’re perhaps considering as a potential retirement destination.

Should you ultimately choose the Grand Canyon State, know that you’ll follow in the footsteps of 56,000 people aged 60+ who made the move there back in 2019 (per SmartAsset). That number represented the second-most popular retirement destination, as Florida ranked #1 with 145,600 people from the same age group flocking to the Sunshine State.

Despite lagging behind Florida with respect to relocation popularity, Arizona has consistently ranked as the second-most popular retirement destination over the last several years. With this in mind, we thought we’d put together this guide on key facts to know about Arizona before you chart your course to the Southwest.

Arizona is not well-represented on one “Best Places to Retire” list

U.S. News & World Report publishes an annual “Best Places to Retire” study based on various factors: including taxes, affordable housing, happiness ratings, and desirability. In their 2021 edition, it takes a good amount of scrolling to find Arizona on the list—with Phoenix (#59) and Tucson (#87) as the only cities to crack the top 100. This is in sharp contrast to the state of Florida, which dominates the list with 13 of the top 25 U.S. cities (and 7 out of the top 10, including #1 Sarasota).

That said, this research isn’t the be-all-to-end-all when it comes to top retirement destinations. Simply Google “best places to retire in the U.S.” and you’ll find various sources that better represent Arizona and mention cities such as Mesa and Green Valley. And while Arizona is not as well-represented as Florida, reasons beyond the sunny weather and scenic views—which you’d be hard-pressed to find elsewhere—point to why so many people choose to retire in Arizona (which we’ll get to shortly).

Where are retirees moving? Proof is in the numbers.

We went back five years and analyzed data to identify just how popular Arizona is as a retirement destination.

According to SmartAsset, roughly 800,000 people ages 60 and older actually moved to their “top 10 retirement destinations” between 2015 and 2019 (these locations varied slightly each year, based on the number of people within this age group who moved). Over 18% within this group ended up in the state of Arizona, which landed in second behind Florida (where almost 46% wound up). For comparison’s sake, the number of Arizona relocations represents more than twice as many people than those who moved to North Carolina (8%)—which often landed third on their lists.

Arizona’s numbers—as a percentage of top-10 destinations—have remained fairly steady: 18.8% in 2015, 16.6% in 2016, 20.0% in 2017, 20.8% in 2018 and 17.5% in 2019.

Arizona is a moderately tax-friendly state  

Arizona is retiree-friendly with respect to your Social Security benefits, inheritance, and estate taxes—that’s because they don’t get taxed, allowing you to pocket additional money and leave more to your heirs. However, Arizona does charge state income tax as well as taxes on most retirement sources: such as 401(k)s and IRAs, hence the “moderate” tax-friendly label.

Let’s assume you’re a 65-year-old who earns $60,000 a year; $15,000 from Social Security, $30,000 from 401(k) and IRA distributions, and $15,000 from part-time employment. Your total state taxes could be as high as $1,162 (the state tax rate is 2.59%), based on this scenario. While this rate is lower than most states, your state income tax bill in Florida—the top-ranked retirement destination—would be $0. While this may not seem like significant savings, if you’re on a fixed income, every dollar counts: especially considering just how expensive retirement really is.

However, know that you can also get up to $2,500 of income exempted from federal and Arizona government retirement plans. Retired military service members also enjoy an exemption on military retirement pay, up to the first $3,500.

For those of you who may want to live in Arizona on a part-time basis until you fully retire, you should know that to claim Arizona as your primary state of residence to receive the aforementioned tax benefits, you’ll need to prove that you spend at least 7 months in the state (within a calendar year) and take several other steps as well.

To make up for some of the lost revenue, Arizona does rank 11th in highest sales taxes—with a combined state and local sales tax average of 8.40% (Florida comes in a little lower at 7.05%).

Housing is affordable in Arizona

According to Zillow.com, the median home value in Arizona, as of early 2021, is $314,071 which is slightly higher than the median value for the United States ($272,446). Compare that to $382,096 in New Jersey (where many of our readers are from) and you can see that, generally speaking, homes in Arizona are much more affordable.

Arizonians also pay very little in property taxes compared to other states (38 states tax at a higher rate, including Florida). Based on the median home value, the average annual tax bill is $1,499 (New Jersey has the worst tax obligations for homeowners, at an average of $8,362).

Moreover, homeowners insurance in Arizona is relatively inexpensive (per insurance.com).

The national average cost for a homeowners policy (for a $300,000 dwelling with a $1,000 deductible and $300,000 worth of liability coverage) is $2,305. The average rate for Arizona is $1,976, meaning that 29 other states—including Florida ($3,643)—are more expensive.

Since housing costs represent the biggest expense for retiree households, a move to Arizona can help many people (especially those relocating from more expensive states) reduce this expenditure.

How arthritis, asthma and allergy sufferers fare in Arizona

For those of you considering Arizona because you suffer from arthritis, you should know that according to the Cleveland Clinic, the weather has a moderate impact on arthritis—but not as much as most think. However, the good news is that you won’t get much cold, wet weather in Arizona (which is the worst for arthritis sufferers).

The same can be said about retirees with asthma and allergies. While many different factors can trigger and affect asthma, air pollution is often a leading cause. According to the American Lung Association’s 2022 State of the Air Report, Phoenix-Mesa continues to rank in the top ten most polluted cities; therefore, where exactly you reside in Arizona can make a big difference.

In regards to allergies, many people choose to move closer to the desert—believing the climate boasts fewer pollen-releasing plants. However, the opposite is actually true. Not only does plenty of Arizona fauna induce allergies, but there are also dust storms: which are especially prevalent in the Phoenix-Tucson corridor.

The best advice here is to spend some time in Arizona and take note of any associated health effects before factoring these considerations into your relocation decision.

Healthcare quality is a mixed bag in Arizona

When we queried various research studies on healthcare quality by state, we found that while each study used different benchmarks, the results were similar: Arizona ranks in the middle or at the top portion of the bottom third (compared to other states) and is in fact quite comparable to Florida in this regard.

More specifically, WalletHub ranked Arizona as the #41 best state for healthcare, and the Agency for Healthcare Research & Quality (AHRQ)—within the United States Department of Health—currently ranks state healthcare as average at best (compared to all others). Nevertheless, U.S. News & World Report issued a ranking of #21 for Arizona in this regard.

Despite these not-so-stellar rankings, that’s not to say high-quality hospitals don’t exist in the state. The Mayo Clinic, consistently ranked as one of the top hospitals in the United States, has a location in Phoenix and is in the midst of a $700 million expansion. Looking to do your own research? Check out this recent list of Arizona’s top-ranked hospitals.

Other Arizona retirement considerations

The Federal Trade Commission recently published data ranking Arizona #19 when it comes to consumer fraud. Specifically, 77,534 reports were filed in 2021—representing 1,065 reports per every 100,000 people. Compare that to Florida, which ranked #5 with 1,370 reports per 100,000. Hence, Arizona is a safer place as it relates to consumer fraud.

The most common categories were identity theft (27%), imposter scams (17%), and online shopping, and negative reviews (6%). The top identity theft type was government documents or benefits fraud. Median fraud losses were $515, which is basically identical to a median of $516 for recent retirees (and those approaching retirement) across the U.S. (60 to 69-year-olds). These numbers are much lower than fraud losses among the older population on a nationwide scale, with medians of $800 and $1,500 reported for those in their 70s and aged 80+, respectively.

Arizona’s warm temperatures and high levels of humidity also pose a moderate challenge with respect to insects. For example, Phoenix and Tucson rank among the top 50 cities with the highest quantity of termite treatments per year (per Terminix). Whether you’re bug-averse or not, the point here is to remain cognizant of the fact you may need to budget extra for pest control services to keep these critters away (depending on where you live).

Finally, we stumbled across neighborhoodscout.com during our research and believe it is a good resource to share. Click on the link to review home values, crime rates, demographics, and much more within Arizona or any other state of your choosing.

In sum: Arizona as a retirement destination

If you’re on the hunt for balmy weather that comes with some really impressive views (the Grand Canyon, Sedona, and Hoover Dam immediately come to mind) and statewide tax benefits, Arizona is a great place to consider for your retirement relocation. That said, before you make any decisions, we recommend spending at least a few weeks in the Grand Canyon State (or any other location of your choosing!) before ultimately deciding where to spend your golden years.

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Disclosures
This document is a summary only and is not intended to provide specific advice or recommendations for any individual or business. 

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