Someone eyeing Sun City, Arizona, the original Del Webb active-adult community, wants to know if a $3,000 monthly budget works at 62 without touching the nest egg. The real answer requires more than a 4% calculator, because the promise (no drawdown) is really about yield, taxes, and health insurance timing.
What Sun City Really Costs on the Ground
Arizona’s cost of living index sits at 100.677, essentially the national average, and Sun City runs below that because of modest, age-restricted ranch homes and Maricopa County’s low effective property tax. The scenario only works if the mortgage is gone, assuming a home valued in the low $300,000s.
A realistic monthly picture for one household:
- Property tax and homeowners insurance: about $300
- Recreation Centers of Sun City (RCSC) fees and HOA: about $50
- Utilities, with heavy summer AC: about $250
- Groceries on the USDA Low-Cost plan for a 60+ adult: about $320
- Transportation, one paid-off car: about $350
- Health insurance before Medicare: about $700
- Personal, dining, gifts, subscriptions: about $400
- Home maintenance reserve: about $200
- Federal and Arizona income tax on portfolio income: about $150
- Miscellaneous and cash reserve: about $280
That totals roughly $3,000. Miss one line item and the budget fails.
The Social Security Math at 62
Claiming at 62 rather than at full retirement age of 67 cuts the check by up to about 30%. If your full retirement age benefit would be $2,400, filing early drops it to roughly $1,680. 2.8% 2026 COLA helps at the margin but doesn’t change the core problem.
A single filer needs roughly $1,300 a month, or $15,600 a year, to hit the $3,000 target. A married couple with two similar work histories, both claiming at 62, can pull in $3,000 to $3,400 combined and get most of the way there on Social Security alone.
Filling the Gap Without Touching Principal
“Without touching savings” is a yield problem. The portfolio must throw off enough interest and dividends to close the gap while the balance stays intact. At today’s rates, that $15,600 annual gap could be produced several ways:
- A 10-year Treasury ladder at 4.58% requires roughly $340,000.
- An investment-grade corporate or muni ladder near 5% takes about $310,000.
- A broad dividend ETF yielding around 2.5% needs roughly $625,000.
- A preferred stock ETF near 6.5% clears it with about $240,000.
A realistic income-tilted mix of treasuries, dividend ETFs, and preferreds around $450,000 generates $15,000 to $20,000 a year without selling a share. Arizona’s tax code helps: the state doesn’t tax Social Security, and ranks 8th nationally on individual income tax, with a flat 2.5% rate on everything else.
The Novel Trap: Your Pre-Medicare Bridge
Retiring at 62 means three full years of your own health insurance before Medicare starts at 65. An ACA silver plan for a 62-year-old in Maricopa County runs $900 to $1,100 a month unsubsidized. Subsidies extend well into six-figure household income, but every dollar of dividend and interest income counts toward MAGI.
That creates a structural conflict with the “no drawdown” premise. Higher taxable yield in your portfolio raises MAGI and lowers your ACA subsidy. A couple holding MAGI under about 250% of the federal poverty line (roughly $51,000) often pays $200 to $300 a month for a silver plan. Push MAGI over 400% and you pay closer to sticker. Across the 62-to-65 bridge, that gap can run more than $20,000 in total premiums. The workaround is source selection: municipal bond interest, qualified dividends, and Roth withdrawals don’t count toward MAGI, letting you produce spending money without inflating the subsidy calculation. A Roth conversion done in your late 50s quietly pays for itself.
The Number That Actually Makes This Work
A Sun City retirement at 62 on $3,000 a month without touching savings takes a paid-off home in the low $300,000s, roughly $450,000 in an income-tilted portfolio yielding about 4%, Social Security claimed early at about $1,700 for a single filer or $3,000-plus combined for a couple, and deliberate MAGI management to hold ACA premiums under $300 a month until Medicare arrives. Arizona’s zero tax on Social Security and 2.5% flat rate keep the arithmetic forgiving. The savings stay put. The income, and the tax planning behind it, does the work.
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