Arizona may be known for its five C’s of cattle, cotton, climate, copper and citrus, but when it comes to retirement the sixth one seems to be cost. If you want to be able to live after working without having to live at work now, a bit of financial planning can help you start a nest egg with a specific amount of money in mind and a corresponding timeline. Knowing what something will cost you is a great way to work backward on your retirement calculator.
Check Out: These Are America’s 50 Fastest-Growing Retirement Hot Spots
Learn More: 7 Reasons You Shouldn’t Retire Before Speaking to a Financial Advisor
GOBankingRates has conducted research to uncover the minimum savings you need to retire in every state for 20, 25 and 30 years. This was based on several variables including cost of living, Social Security income, healthcare and more. Here are some key takeaways:
- The national average Social Security income is $21,567, which is good to know when comparing how far your benefits will get you in Arizona.
- The minimum needed to retire in Arizona for 20 years is around $840,661, whereas the minimum for 25 years is over $1 million, and it’s over $1.2 million for 30 years.
- Arizona’s average annual cost of living, including total expenditures, is $63,600 — $42,033 after Social Security.
Having nearly $1 million in your savings may seem like a lofty financial goal, but without working your way toward it, an Arizona retirement plan may be out of the question. Here are six reasons you need at least $840,661 in your savings, plus Social Security, to retire in Arizona for 20 years.
Unrealistic Real Estate and Housing Costs
- Average Annual Housing Cost: $15,059
Warm weather is one thing, but the climate of the housing market in Arizona is anything but predictable. When you reach retirement age you don’t want to have to worry about high interest rates or monthly mortgage payments on a fixed income. Social Security is a nice cushion but GOBankingRates found that the cost of housing in Arizona comes in around $15,059 a year on average.
Discover More: America’s 50 Most Expensive Retirement Towns
Hearty Healthcare Expenses
- Average Annual Cost of Healthcare: $7,178
Unexpected medical bills or skyrocketing insurance premiums can put a real dent in your retirement savings. Not to mention expected out-of-pocket expenses for checkups and prescriptions. GOBankingRates estimates that people in Arizona pay around $7,178 a year in healthcare costs.
Food Inflation
- Average Annual Cost of Groceries: $4,936
There is no way of getting around having to eat, so factoring in your groceries into your monthly budget is a must. This becomes particularly precarious when food costs are consistently high and ever-increasing at even your local market and vendors. GOBankingRates currently estimates that shoppers in Arizona spend around $4,936 on groceries a year.
Increasing Utility Bills
- Average Annual Cost of Utilities: $4,024
To keep the air conditioning pumping and, well, the lights on, you’ll need to set aside a certain amount each month for utilities. Obviously, the more you can save in the long run on energy-efficient appliances and other hacks, the better, but these expenses will still be a chunk out of your retirement income. GOBankingRates found that annual utility costs average around $4,024.
Premium Transportation Costs
- Average Annual Cost of Transportation: $5,215
Arizona is definitely a state where you’ll need a car or other transportation to get around in retirement and between rising gas prices and insurance premiums it can be a lot to ask of a fixed income. Even if you are counting on Social Security to cover some of the costs, GOBankingRates estimates that you’ll pay around $5,215 a year on transportation in Arizona.
The Cost of Living Before and After Social Security
- Average Annual Total Cost of Living: $63,600
- Average Annual Total Cost of Living After Social Security: $42,033
- Minimum Needed for 20 Years of Retirement: $840,661
- Minimum Needed for 25 Years of Retirement: $1,050,826
- Minimum Needed for 30 Years of Retirement: $1,262,253
The cost of living in Arizona, whether you are retired are not, can tip toward the higher side. However, these figures are estimates based on averages, so keep in mind your unique financial situation. There are always ways to practice more frugal habits to bring down your monthly and annual bills.
Bottom Line
The bottom line is that starting your retirement savings toward a specific retirement goal can help you hone your money management skills now. With economic volatility making the future of your finances questionable, everything you can control now will help you prepare for any surprises down the road. The seventh Arizona C can be known for “consistently adding to your retirement savings.”
Methodology: In order to find out exactly how much you need to retire in your state, GOBankingRates found the annual cost of expenditures for a retired person in each state by multiplying the 65-and-older expenditures from the Bureau of Labor Statistics’ 2022 Consumer Expenditure Survey by the cost-of-living index for each state from the Missouri Economic Research and Information Center’s Q3 2023 cost-of-living series. To find how much money a retired person would need to save, we divided each state’s annual expenditures, minus the annual Social Security income as sourced from the Social Security Administration’s Monthly Statistical Snapshot, March 2022, by 0.0333%, 0.04% and 0.05% assuming 20, 25 and 30 years of retirement. All data was collected on and is up to date as of Jan. 8, 2024.
More From GOBankingRates
- 7 Reasons You Should Consider a Financial Advisor -- Even If You're Not Wealthy
- 5 Affordable Car Brands That Will Last Over 10 Years With Proper Maintenance
- 3 Things to Do This Week If You Have Debt
- This is The Single Most Overlooked Tool for Becoming Debt-Free
This article originally appeared on GOBankingRates.com: Why You Need at Least $840K (Plus Social Security) To Retire in Arizona
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
