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All Contents © 2020The Kiplinger Washington Editors
By Bob Niedt, Online Editor
| April 19, 2019
Florida, Arizona’s population swells in the winter months — a 2002 study by the Arizona State University reported a boost of nearly 300,000 retirees who temporarily settled in Arizona for the winter. In Lake Havasu City, for instance, the year-round population of 57,000 nearly doubled to 100,000.
Many other retirees have settled in Arizona year-round. The nation’s first active adult retirement community sprouted in Youngtown, Ariz., in 1954, and today 17% of the state’s 7.2 million residents are 65 and older.
Is Arizona calling to you, too, as you plot your retirement? Here are nine things you should know before deciding to retire in Arizona.
Between 2010 and mid-2018, Arizona’s population grew by 12.2%. (By comparison, New York state’s population grew only 0.8%.) In 2018, Arizona ranked number five (behind Vermont, Oregon, Idaho and Nevada) among states with the most inbound movers, according to United Van Lines. Retirement was the reason for the relocation cited by 37% of the Arizona newcomers.
There are more than 100 age-restricted retirement communities across the state. The most popular, according to 55places.com, a website focused on active adult communities, is Sun City Festival–Buckeye in Phoenix, an age-restricted retirement community for folks 45 and older. It boasts a “resort-like atmosphere,” including Sage Recreation Center, a 31,000-square-foot amenity that features a large outdoor pool with waterfalls, a high-end fitness center and a grand ballroom.
You knew that already, didn’t you?
But perhaps you’ve never really experienced it. “Yes, that ‘dry heat’ thing is real,” says Bob Burwell, a retiree from New York state now living in Mesa. “Even in the low 100s at 8% humidity, it is way more tolerable than 85 degrees with 90% humidity. Once the sun sets, the temperature drops rapidly.”
Annual precipitation ranges from 3 inches in the arid southwest to roughly 40 inches in the mountains of east central Arizona, according to the Arizona State University’s climate office.
“The most obvious reason to retire in Arizona is the beautiful climate,” says Damian Bruno, an affiliate agent with the Sedona–Village of Oak Creek office of Coldwell Banker Residential Brokerage. “However, many do not realize that it is a varied climate, with the northern part of the state receiving four seasons.”
Indeed, the state isn’t one big arid desert. There are a variety of climates that offer seasonal changes.
Our colleagues at The Kiplinger Letter included Lake Havasu City, located near the border with California, among its 2018 list of satellite cities poised for growth. The temperature in Lake Havasu averages a high of 97°F in July and a low of 53°F in December and January, according to the Arizona Department of Water Resources. Realtor Patty Caperon, an affiliate agent with the Coldwell Banker Residential Brokerage office in Lake Havasu, describes it as a “very laid-back, relaxing city whether you’re having dinner overlooking the channel, a night at Grace Arts Live Theatre or hanging with friends.”
Jim and Molly Pfennig moved to Lake Havasu City from Bozeman, Mont., where Jim was in the construction business. They recently built a house in the Arizona town after having lived there since 2012. “The town was founded in 1968, so pretty much everyone is from somewhere else originally,” says Jim. “And it’s not lacking for things to do. There’s the lake if you want to boat or ski. In the winter, there are concerts and car shows, something every weekend.”
For an even smaller town, look to Payson (population: 15,000), recommended by the website Best Places to Live Now. It’s located in the center of Arizona, a 90-mile drive northeast of Phoenix. At 5,000 feet above sea level, the town’s motto is “Arizona’s Cool Mountain Town.” Active retirees enjoy the surrounding Tonto National Forest for everything from hiking and bird watching to mountain biking and canoeing.
If health care is driving your search, consider Mesa, one of 10 U.S. cities celebrated by Kiplinger’s Personal Finance in 2018 as great places to retire for your health. Mesa got high scores for its proximity to top-rated hospitals, a cost of living that’s lower than the national average and a range of activities for lovers of nature, sports and the arts.
Retired Arizonans can find plenty to do across the state, says Coldwell Banker’s Caperon.
“There's skiing, professional sports, boating, golfing, hiking, biking, off-roading, sightseeing, fishing. . .” she says.
There’s also the Grand Canyon, of course, and plenty of national parks within driving distance throughout the southwest. Consider buying a National Parks and Federal Recreational Lands Senior Pass (good for access to the 112 National Park Service sites that charge admission) if you are 62 or older. Annual passes are $20, and a lifetime pass is $80 per person. (Regular admission to the Grand Canyon, for comparison, is $35 per vehicle or $20 per person per visit.)
Baseball fans can enjoy the relaxing atmosphere of Major League Baseball’s “cactus league” across Arizona—spring training for 15 teams in cities such as Phoenix, Tempe, Scottsdale, Surprise, Goodyear and others.
And golfers can tee it up at more than 300 courses across the state, ranked number two (behind only Florida) by Golf.com for “golfiness”—a measure of the quantity and quality of courses, along with the avidness of Arizona golfers.
Planning to rent before you buy to assess different communities? In most places, January through March or April is peak snowbird season. Migrators often book the same place for the coming year before they leave in the spring, and others begin booking their rental as early as August. Early birds get the biggest blocks of time and the most-desirable properties.
Expect to pay monthly rent (excluding fees and taxes) of $2,500 to $3,500 for a typical condo (two-bedroom, two-bath) or $3,000 to $9,000 for a single-family home (three-bedroom, two-bath) from January through March, according to Vacasa.com, which lists and manages vacation rentals in 23 states and 16 countries.
Carol and Phil White of Bend, Ore., had tried wintering in Hawaii, southern California and Texas before settling on Phoenix. In 2014, after looking at more than 30 communities, they found a home in Sun City Grand, on the west side of Phoenix. It had everything they wanted: friendly people, good home values, a reasonable homeowners association fee, four golf courses, and lots of amenities and activities.
The Whites paid $184,000 for a 1,580-square-foot home with two bedrooms, two baths and a den, and they pay an annual HOA fee of $1,480. They split their time between Bend and Phoenix. Many of their friends from Bend winter nearby, too. “We have a whole ’nother life down there that we totally love,” says Carol, 71.
-- Reporting by Patricia Mertz Esswein
The best time to buy a home in Arizona is usually in the late spring, when much of the competition from snowbirds has dissipated. In summer and fall, you’ll have fewer options to look at, but the remaining sellers may be more motivated and willing to negotiate.
As of December 31, 2018, the median home price was $252,000 in Phoenix (up 8.7% year-over-year) and $198,000 in Tucson (up 8.5%). Real estate website Zillow forecasts 4.8% higher prices state-wide over the next year.
In the 55-and-older gated community of Sun City West, for example, Zillow recently showed 10 homes listed for sale. They ranged in price from $179,975 for a two-bedroom, two-bathroom, 1,100-square-foot home to $739,000 for a two-bedroom, two-and-a-half-bathroom, 2,784-square-foot home. That includes the home and property and, in some cases, an attached golf-cart garage. (Gated communities often tack on mandatory homeowners association dues to cover property maintenance and amenities.)
Your state tax bill in Arizona will depend greatly on the sources of your retirement income.
Arizona does not tax your Social Security benefits (unlike these states that do). And on most other income that is taxed, rates are relatively low—from 2.59% (for married filers with as much as $20,690 of taxable income) to 4.54% (for married filers with more than $310,317 of taxable income).
However, if you’re retiring on a generous pension, Arizona’s not so friendly. Private pensions are fully taxed at ordinary income tax rates in the state, as are government pensions from other states. For those with military, civil service, and Arizona state and local government pensions, only the first $2,500 in such income is exempt from Arizona state taxes.
Arizona’s state sales tax is 5.6%. But, because localities can add their own sales taxes, you could pay as much as 5.3% more in sales tax depending on where you land (and shop) within the state. The average combined levy is 8.33%, according to the Tax Foundation.
Burwell, the retiree from New York state now living in Mesa, has learned his way around the sales-tax discrepancies. “I can leave my community, turn left and go one mile to a CVS where I will incur the City of Mesa 2.0% sales tax [on top of the 5.6% state sales tax],” he explains. “But if I turn right, I will hit an equidistant Walgreens that is in unincorporated Maricopa County and not pay that tax.”
Arizona is one of only two states (Hawaii is the other) that don’t observe daylight saving time, when clocks “spring forward” an hour. That aligns Arizona with Pacific Daylight Time in spring, summer and part of fall, then with Mountain Standard Time during most of fall and winter.
Says Burwell, “The only havoc this raises is in regard to live TV, mainly sports. In September and October, the NFL games start at 10 a.m. The sports bars open at 9 and serve breakfast. Consequently, I don't fall asleep before the World Series games or Monday Night Football are over.”