The Pros and Cons of Retiring in Arizona

Arizona has become an increasingly attractive option for retirees, with nearly 19% of its population aged 65 or older – above the national average. With warm weather, a relatively low cost of living and a variety of tax benefits, the state offers a compelling mix of lifestyle and financial advantages. Retirees are also drawn to Arizona’s active adult communities and year-round access to outdoor recreation. However, it’s important to weigh potential drawbacks, including extreme summer heat, water supply concerns and higher energy costs during peak seasons.

Deciding where to retire is one of the most significant financial choices you’ll make in your senior years. In this guide, we’ll take a closer look at what Arizona has to offer – both the benefits and the considerations – to help you make a decision that supports your long-term goals. Whether you’re looking for a slower pace or an active, community-focused lifestyle, understanding the full picture is key to planning with confidence.

WHY RETIREES LOVE ARIZONA

Arizona’s appeal as a retirement destination is well earned. Year after year, it ranks among the top states for retirees – and with good reason. The state offers a combination of tax advantages, affordable housing in many areas and around 300 days of sunshine each year. Drawn by the promise of an active lifestyle, many retirees call Arizona home for its scenic surroundings and a lower overall cost of living compared to many coastal states.

Retirees also benefit from a growing network of age-friendly communities, quality health care facilities and endless opportunities for outdoor recreation — from morning hikes in the desert to afternoons on the golf course. While factors like extreme heat, water resource concerns and seasonal air quality are worth keeping in mind, Arizona’s blend of financial benefits and lifestyle amenities makes it a strong option for those looking to retire with both comfort and confidence.

THE PROS OF RETIRING IN ARIZONA

Here’s a look at some of the top benefits Arizona has to offer retirees:

1. TAX ADVANTAGES: KEEP MORE OF YOUR RETIREMENT INCOME

Arizona’s tax-friendly environment is one of the key reasons retirees choose to settle here. While not entirely tax-free like some states, Arizona offers meaningful advantages that can help retirees stretch their savings.

• No tax on Social Security benefits: Arizona does not tax Social Security income, helping retirees preserve a key source of retirement funding.
• Partial exemptions for other income: While Arizona does tax most retirement income, including pensions and 401k or IRA withdrawals, the state provides some exemptions for military, civil service and certain public pensions.
• No inheritance or estate tax: Retirees can pass on assets to their heirs without worrying about state-level estate or inheritance taxes – offering peace of mind when it comes to legacy planning.
• Moderate property taxes: Arizona’s property taxes are generally lower than the national average, making home ownership more affordable, particularly in retirement-focused communities.

Compared to higher-tax states like California or New York, where retirees may see significant portions of their income go toward state and local taxes, Arizona offers a more balanced and manageable tax landscape. Combined with a lower overall cost of living in many areas, Arizona can be a smart choice for retirees looking to make the most of their nest egg.

2. YEAR-ROUND WARM CLIMATE: ENJOY SUNSHINE AND OUTDOOR LIVING

Arizona’s warm, dry climate is a major draw for retirees – especially those looking to leave behind icy winters and grey skies. With around 300 days of sunshine per year in many parts of the state, Arizona offers an ideal setting for year-round outdoor living. Retirees can take advantage of the pleasant weather with activities like:

• Golfing on scenic desert courses in Phoenix, Scottsdale and Tucson
• Exploring national parks and hiking trails, including the Grand Canyon and Sedona’s red rock country
• Biking, walking or enjoying outdoor dining throughout the state’s many active adult communities

Arizona’s low humidity and mild winters make it particularly attractive for individuals with health concerns related to damp or cold climates. And similar to top retiree states such as Florida, Arizona supports a strong “snowbird” culture – many retirees split their time between Arizona in the winter and cooler destinations during the summer months, giving them flexibility while still benefiting from the state’s climate and tax advantages.

Whether you’re looking for an active outdoor lifestyle or just more sunny days to relax, Arizona offers a climate that supports a vibrant retirement all year long.

3. SENIOR-FRIENDLY COMMUNITIES: BUILT FOR CONNECTION

Arizona offers a wide range of retirement communities designed with older adults in mind – combining comfort, convenience and connection. Whether you’re looking for a peaceful desert retreat or a vibrant, activity-filled neighborhood, Arizona’s communities provide the support and amenities that make retirement living easier to enjoy.

Here are just a few popular options:

• Sun City: One of the first master-planned retirement communities in the U.S., Sun City remains a top choice with golf courses, recreation centers and a calendar full of social events.
• Green Valley: Located south of Tucson, Green Valley is home to several age-restricted communities known for their affordability and access to outdoor activities, including hiking and birdwatching.
• Scottsdale and Mesa: These metro areas offer upscale 55+ communities with modern amenities, wellness programs and proximity to high-quality health care.

Across the state, 55+ communities are built to foster connection – with shared spaces, fitness classes, clubs and events that help retirees stay active and engaged. Many also offer ready access to hospitals, specialists and support services, making it easier to age in place with peace of mind.

4. HEALTH CARE ACCESS: QUALITY CARE WHEN AND WHERE YOU NEED IT

Health care is a top priority for retirees and Arizona delivers strong options — especially in and around its major cities. The state is home to nationally recognized medical centers and health systems, many of which specialize in geriatric care and chronic condition management.

Retirees in Arizona also benefit from a wide selection of state-specific Medicare Advantage and Medigap plans, offering flexibility when it comes to coverage and care. Access is particularly strong in areas like Phoenix, Tucson and Scottsdale, where hospital networks such as Mayo Clinic, Banner Health and Dignity Health provide services across specialties.

In more rural parts of the state, health care options may be less extensive, but many retirees may find that proximity to a metro area balances out that trade-off. Arizona’s dry climate is also a plus for individuals with respiratory issues, arthritis and other health concerns aggravated by humidity or cold weather.

5. AFFORDABLE LIVING IN SELECT REGIONS

Arizona offers a range of cost-of-living options that can make retirement more financially sustainable – particularly outside of its most expensive markets. While popular areas like Scottsdale and Sedona tend to carry higher home prices, many communities throughout the state remain budget-friendly for retirees.

For example:

• Tucson consistently ranks among Arizona’s most affordable cities, with a cost of living around 9% below the state average.
• Yuma, Prescott and Sierra Vista offer smaller-town charm and lower housing costs, making them appealing for retirees seeking value without sacrificing quality of life.
• Arizona’s effective property tax rate averages just 0.63%, one of the lowest in the country. This can be a significant financial advantage over time, especially for homeowners on a fixed income.

The housing market in Arizona has also shown signs of stabilization, with home inventory gradually increasing across much of the state. This shift could benefit retirees looking to buy – providing more options and easing some of the pressure from previous years’ rapid growth.

While Arizona doesn’t offer a homestead exemption as large as states like Florida, its combination of lower property taxes, no tax on Social Security benefits and diverse housing options can create a solid foundation for an affordable retirement – especially for those willing to explore areas beyond the high-demand cities.

THE CONS OF RETIRING IN ARIZONA

While Arizona has much to offer retirees – from sunny days to favorable tax policies – it also comes with trade-offs that are worth considering. From summer heatwaves and water supply concerns to limited public transportation and variable health care access in rural areas, here are some of the key factors retirees should keep in mind.

1. EXTREME SUMMER HEAT

Arizona’s desert climate means hot, dry summers – and, in some areas, dangerously so. In a city like Phoenix, summer temperatures average 105°F, with heat warnings common between June and September.

For retirees who enjoy the outdoors, these high temperatures can limit daily activities for several months of the year. Extended exposure to extreme heat also increases health risks, especially for older adults, including dehydration, heat exhaustion and heatstroke. While air conditioning is nearly universal in Arizona homes, it’s important to account for higher utility bills during the hottest months – especially if you're on a fixed income.

2. WATER SCARCITY AND ENVIRONMENTAL CONCERNS

Arizona is among the driest states in the U.S. with only 14.71 inches of precipitation annually on average. Long-term drought conditions put pressure on the state’s water supply – particularly from the Colorado River Basin, which serves much of the Southwest.

While the state has taken steps to manage water use, including restrictions and conservation efforts, ongoing concerns about sustainability may impact infrastructure, growth and even property values in the long term. For retirees, this may not be an immediate dealbreaker, but it’s something to monitor if you're planning for a decades-long stay.

3. HIGH HOUSING COSTS IN CERTAIN AREAS

Like many parts of the country, Arizona has seen rising home prices – especially in popular areas like Scottsdale, Sedona and parts of Phoenix. As of early 2025, the median home price in Scottsdale sits around $900,000.

Additionally, while Arizona doesn’t tax Social Security benefits and has relatively low property taxes, it does tax most other forms of retirement income, such as distributions from 401ks and IRAs. This could lead to higher-than-expected tax bills for some retirees depending on their income mix.

4. LIMITED PUBLIC TRANSPORTATION IN RURAL AREAS

Arizona’s major metro areas, like Phoenix and Tucson, offer public transit options – but in many smaller cities and rural communities, access to reliable transportation can be limited. This can present challenges for retirees who don’t drive or prefer to age in place without relying on a personal vehicle.

If you’re planning to settle outside a major hub, it’s important to factor in proximity to essential services, grocery stores and medical care – especially as mobility needs change over time.

FINAL THOUGHTS ON RETIRING IN ARIZONA

Arizona continues to attract retirees – but deciding if it’s the right fit comes down to more than just sunshine and desert views. Thoughtful financial planning can help turn a retirement dream into a sustainable, long-term reality.

Arizona may be a great choice for retirees who:

• Want to live in a state with no tax on Social Security benefits
• Prefer low humidity and minimal winter weather
• Are looking for active 55+ communities and access to outdoor recreation year-round

However, it may not be ideal for:

• Retirees who are sensitive to extreme heat or poor air quality during wildfire season
• Those concerned about water scarcity or higher housing costs in popular regions

START PLANNING YOUR RETIREMENT IN ARIZONA

Choosing Arizona for retirement means balancing financial benefits with lifestyle considerations – from climate and taxes to health care and housing.

An advisor can help retirees:

• Align their personal goals with the financial realities of retiring in Arizona
• Make smart decisions about tax efficiency, income withdrawals and health care planning
• Build a long-term investment strategy that supports their ideal retirement lifestyle

Ready to explore whether retiring in Arizona is the right choice for you? Connect with an advisor to start planning for a secure and fulfilling retirement.