Thinking of relocating for retirement? Many people think of retiring in Arizona -- perhaps because so many people have retired in Arizona. (About a fifth of the state's population is older than 65.)
Arizona offers lots and lots of sunshine, and outdoor activities such as golfing, hiking, fishing, and camping. On the other hand, its summers are really hot, with temperatures often in the triple digits. Along with heat waves, depending on where you live in Arizona, you may face the risk of wildfires, flash flooding, and/or dust storms.
Image source: Getty Images.
Taxes in retirement are a key concern for many retirees, so you should know that Arizona, like most states, does not tax Social Security benefits. Distributions from 401(k) and IRA accounts are taxable, though, as are many pensions. There are other taxes, too, such as Arizona's state sales tax, which was recently 5.6%. Many locations in Arizona have their own additional sales tax, so the overall average state and local sales tax was recently 8.38%, a hefty sum. Groceries and prescription drugs are exempt from the state sales tax, but vehicles are not, so you could end up paying $1,680 or more in sales tax on a $30,000 car.
The average Arizona home value, as of 2025's second quarter, was about $441,802, a bit above the recent median U.S. home sale price of $410,800. Much depends on where you live, though. The state's overall cost of living is only 2% higher than the national average, per RentCafe.com, but in places such as Miami and Fort Lauderdale, it can be more than 20% higher.
The cost of living is another potential drawback, depending on your income level -- because on average, it's 18% above the nation's cost of living, per RentCafe.com, with housing 15% higher, goods and services 37% higher, and healthcare 4% higher.
Go ahead and consider Arizona, but perhaps try living there for a few months or even a year before moving there, to make sure it's a good fit.
