The Arizona Retirees Who Stayed Say the Ones Who Fled the Summers Got One Thing Wrong
Retirees who escape Arizona every summer think they're saving money, but the math tells a very different story about what that four-month break actually costs their portfolio.
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Every May in Phoenix and Tucson, some retirees lock up the house and leave for cooler places until October. Those who stay year-round usually say the same thing: summer is the cheap part. This piece works through the numbers for a couple at 67 who own their Arizona home outright and live there year-round. It then shows how a four-month summer escape affects the size of the portfolio they need.
What a Year-Round Arizona Budget Actually Costs
Statewide, Arizona costs about the national average. The federal Bureau of Economic Analysis puts its price index at 100.677, where 100 is the U.S. average. Tax rules help even more. Arizona ranks 15th overall in the Tax Foundation’s competitiveness index, 8th on individual income tax and 13th on property tax. Sales tax is the weak spot, at 45th. The state charges a flat 2.5% income tax and exempts Social Security. IRA withdrawals are taxed, though, and only up to $2,500 of government pension income is excluded.
Property taxes are where people feel the move most. One Oro Valley couple went from paying more than $13,000 a year in Illinois to about $3,600 in Arizona. With Phoenix’s median home value near $410,222, that $3,600 is a fair planning figure for a mid-priced home. For the most part, these line items are assumptions based on typical spending, so swap in your own numbers to best calculate your overall spend.
| Line Item | Annual Cost |
|---|---|
| Property tax | $3,600 |
| Homeowners insurance (state median $993) | $1,000 |
| Electricity, water, gas | $5,000 |
| Medicare Part B, two people at $202.90 monthly | $4,870 |
| Medigap, Part D, dental, out-of-pocket | $9,000 |
| Food | $12,000 |
| Transportation and vehicle replacement | $8,000 |
| Home maintenance (AC units, roof, pool) | $6,000 |
| Travel, gifts, personal spending | $10,000 |
| Emergency reserve contribution | $3,000 |
| Federal and Arizona income tax | $1,000 |
| Total | About $63,500 |
How Social Security Covers Most of the Bill
Say each spouse collects the average retired-worker benefit of $2,071 a month. Together, that’s $49,704 a year, leaving a gap of about $13,800. Divide that by a 4% withdrawal rate, which fits a 30-year horizon, and the portfolio target is about $344,000. Taxes stay small at this withdrawal level. The standard deduction uses up most of the IRA income, so very little is taxed at either the federal level or Arizona’s 2.5%.
When you claim, the answer changes a lot. If those benefits are full-retirement-age amounts, waiting until 70 raises them by roughly 24%, to about $61,600. This shrinks the gap to around $1,800 a year, leaving the portfolio to mainly cover the years before benefits start. Inflation is the risk to watch. Recently, 2027 COLA is tracking toward 3.3%, a bit below the latest 3.4% year-over-year CPI reading. Medicare premiums have also been going up faster than either one.
Second Household That Summer Escapees Underprice
Staying for the summer costs real money, but less than people expect. A typical Phoenix-area household pays $250 to $500 per month for electricity at the peak. Four months at the top of that range adds up to $2,000.
Leaving doesn’t turn those costs off, as the Arizona house still needs insurance, property tax, pool service, and the AC running on standby. Add in the summer rental, too. A furnished place somewhere cooler at an assumed $3,000 a month for four months costs $12,000 a year. Using a 4% withdrawal rate, that requires another $300,000 in the portfolio, bringing the target to about $644,000.
The Oro Valley couple shows how this works in the other direction. They invested the roughly $10,000 a year they saved on property taxes, and after seven years the account had grown past $100,000. A summer escape is the same kind of recurring amount, except it comes out of the portfolio every year instead of going in. It also takes the couple away during the months when Arizona golf, dining, and resort rates are at their lowest.
Number That Makes Year-Round Arizona Work
A couple with a paid-off home and two average Social Security checks needs about $345,000 invested for a comfortable year-round Arizona retirement. Spending starts at about $63,500 a year, with a 4% initial withdrawal. The portfolio needs to be a mix of broad index funds and a Treasury ladder that can earn about 4 points above inflation over the long run. Delaying both benefits to 70 shrinks the target to bridge money.
Adding a four-month summer escape nearly doubles it. Staying through an Arizona summer means paying the electric bill. Leaving means maintaining a second household, paid every year for as long as the couple keeps doing it.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
