Retire in Arizona: Cost, Taxes & FIRE Number for 2026
Retiring in Arizona costs about $55,500 a year on average, earning a B+ retirement tax grade and a #29 healthcare ranking. Here's the full breakdown — cost, taxes, and how much you actually need saved.
What It Costs to Retire in Arizona
The average retiree in Arizona spends about $55,500 a year ($4,625/month), based on BLS spending data for households 65 and older, adjusted for Arizona's cost of living. That works out to a standard retirement number of $1,387,500 under the 4% rule, or $1.59M for early retirees using the more conservative 3.5% FIRE withdrawal rate.
How the numbers below are calculated:
Annual cost = BLS Consumer Expenditure Survey 2024 (65+ household spending) × Arizona's cost-of-living index (MERIC Q3 2025).
Standard Retirement Number = Annual Cost ÷ 0.04 (4% rule, ~30-year horizon)
FIRE Number = Annual Cost ÷ 0.035 (3.5% rule, 40–50+ year horizon for early retirees)
Arizona earns a B+ retirement tax grade from Plootus Research and ranks #29 of 50 states for healthcare quality. Combined with an average annual salary of $62,840 for working residents (median $51,200), that gives a fuller picture of what building — and eventually spending down — a nest egg looks like here.
Arizona Retirement Snapshot
| Metric | Arizona |
|---|---|
| Average annual retirement cost | $55,500/yr |
| Average monthly retirement cost | $4,625/mo |
| Standard retirement number (4% rule) | $1,387,500 |
| FIRE number (3.5% rule) | $1.59M |
| Retirement tax grade | B+ |
| State income tax | 2.5% flat |
| Social Security tax | ✅ No tax |
| Healthcare quality rank | #29 of 50 |
| FIRE-friendliness rating | ★★★★☆ |
| Average annual salary (working residents) | $62,840 |
| Median annual salary (working residents) | $51,200 |
Sources: BLS CES 2024 (65+); MERIC Q3 2025; BLS OEWS May 2024; Plootus Research 2026.
Your Arizona-Adjusted Retirement Number
Pre-filled with Arizona's average retirement spending — adjust for your own situation.
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How Arizona Compares to Nearby States
| State | Annual Cost | Retirement Number | Tax Grade | HC Rank |
|---|---|---|---|---|
| Arizona (this page) | $55,500 | $1,387,500 | B+ | #29 |
| Nevada | $55,000 | $1,375,000 | A | #39 |
| Texas | $57,500 | $1,437,500 | A | #30 |
| New Mexico | $51,500 | $1,287,500 | C | #42 |
→ Run a full side-by-side comparison in the State Comparison Tool
How Arizona Treats Retirees on Taxes and Healthcare
Arizona carries a B+ retirement tax grade from Plootus Research — an above-average, generally tax-friendly state for retirees.
State Income Tax
Arizona's state income tax tops out at 2.5% flat. Check current brackets and any retirement-income deductions before you file.
Social Security Tax
Arizona does not tax Social Security benefits, one of the factors behind its B+ tax grade.
Arizona ranks #29 nationally for healthcare quality — solidly mid-pack, worth researching specific providers in your target city.
Frequently Asked Questions
Arizona earns a B+ retirement tax grade and ranks #29 of 50 for healthcare quality. Average annual retirement spending runs about $55,500, requiring roughly $1,387,500 in savings under the standard 4% withdrawal rule. Whether it's a good fit depends on your priorities — Arizona's state income tax is 2.5% flat, and it does not tax Social Security.
Arizona does not tax Social Security benefits, one of the factors behind its B+ tax grade. Confirm current thresholds and exemptions with a tax professional, since rules change year to year.
Using the standard 4% rule, retiring in Arizona on its average annual cost of $55,500 requires approximately $1,387,500 in savings. That figure excludes Social Security, which most retirees layer on top to reduce the amount they need from their own portfolio.
At a 3.5% safe withdrawal rate — the more conservative rate recommended for early retirees facing a 40–50+ year horizon — Arizona's FIRE number is approximately $1.59M, based on its $55,500/year average cost. Early retirees should also budget separately for healthcare before Medicare eligibility at 65.
- Bureau of Labor Statistics, Consumer Expenditure Survey 2024 (65+ age group)
- Missouri Economic Research and Information Center (MERIC), Cost of Living Index Q3 2025
- Bureau of Labor Statistics, Occupational Employment and Wage Statistics (OEWS) May 2024
- Kiplinger, Retirement Taxes 2026; WalletHub Best States to Retire 2026
- Plootus Research 2026 (tax grades, healthcare rank, FIRE ratings)
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