Yahoo Finance Retirement in Phoenix: 5 Reasons It Costs You Less Than $50,000 a Year
For retirees on a budget, stretching those hard-earned nest eggs as far as possible is crucial. And according to a recent GOBankingRates study analyzing cost of living data across major U.S. cities, Phoenix, Arizona stands out as an exceptionally affordable place to settle down for one’s golden years.
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The research found that the total average annual cost of living for a retiree in Phoenix after factoring in Social Security income clocks in at just $31,642 per year. With over 185,000 residents aged 65 and up already calling The Valley of the Sun home, here are five compelling reasons why retiring to Phoenix on less than $50,000 annually is an achievable goal.
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Affordable Housing Costs
One of the biggest perks Phoenix offers cash-strapped retirees is relatively inexpensive housing compared to other major metro areas.
The study calculated that a Phoenix retiree can expect to pay around $1,841 per month for expenditures (including common homeownership expenses). For those who choose to rent instead, the area’s median rent hovers around $1,312 for a one-bedroom apartment, according to Apartments.com.
Thanks to an abundance of budget-friendly 55+ communities and assisted living facilities across the metro, seniors have their pick of low-cost yet comfortable housing options to fit any retirement lifestyle and budget.
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Low(ish) Taxes
While Arizona doesn’t offer a complete tax haven for retirees, it does provide some notable tax breaks that help stretch those income dollars. For starters, the state doesn’t tax Social Security benefits at all — a huge perk for seniors who rely heavily on those payments to cover living expenses.
As for other forms of retirement income, it’s not quite as rosy but still pretty favorable overall. Arizona fully taxes disbursements from 401(k)s, IRAs, pensions and the like just like regular income. However, there are a few key exemptions that can significantly reduce one’s tax liability.
Those aged 65 and up can exclude $2,500 from each separate retirement income source from state taxation. So if you’re receiving payouts from a 401(k), IRA and pension, that’s $7,500 automatically shielded from Arizona taxes right off the bat.
On top of those senior-specific exemptions, all Arizonans — regardless of age — can generally exclude another $2,500 from their overall state taxable income.
The state’s individual income tax rates are also pretty middle-of-the-road compared to other retirement hotspots. When combining state and local sales taxes too, the overall tax burden isn’t necessarily low, but it’s certainly not outrageous either.
Excellent Healthcare
Access to quality, low-cost healthcare is obviously important for seniors, and Phoenix doesn’t disappoint. There are dozens of nationally ranked hospitals and medical facilities in the area, including top-tier options like the Mayo Clinic, Banner Health centers and HonorHealth facilities.
What’s more, Medicare Advantage plans with low premiums and comprehensive coverage are also widely available.
Sunny Climate
Of course, one of Phoenix’s biggest draws for retirees is its warm, sunny climate perfect for soaking up vitamin D and enjoying an active outdoor lifestyle year-round. Retirees can enjoy the hiking trails, public golf courses, community pools and recreation centers to stay healthy and socially engaged.
Those worried about braving the desert heat during summer months — fair enough! — can easily take advantage of discounted “snowbird” rates at many local hotels and resorts between May and September.
Bustling Social Scene
Speaking of staying social, Phoenix is a surprisingly vibrant metro area — especially for retirees and active adults. The region’s diverse blend of restaurants, museums, pro sports teams, performing arts venues and other attractions provide endless entertainment options to keep one’s retirement exciting.
Dozens of local clubs and community organizations also allow seniors to easily connect with one another based on shared interests and hobbies. Between all the local events, social offerings and area’s general walkability, it’s easy for recent transplants to quickly build an engaging new community for themselves.
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This article originally appeared on GOBankingRates.com: Retirement in Phoenix: 5 Reasons It Costs You Less Than $50,000 a Year
