Florida and Arizona. The Sunshine State and the Grand Canyon State. With their warm weather, plentiful cheap housing options and natural scenery, both states have earned strong reputations as popular destinations for retirees.
But which of these titans of retirement is truly the better choice? To help address that question, GOBankingRates conducted a study comparing Arizona and Florida in terms of which state offers the most beneficial features for American retirees. The report’s criteria included factors such as income, housing prices and affordability, as well as taxes that affect retirees. Use this data to help decide which state is the best for your retirement.
Last updated: Sept. 3, 2020
Population 65 Years and Over
When you’re looking for a place to call home, it stands to reason you’d want a significant portion of the population to be around your age. What better way to make friends and feel comfortable in your neighborhood than to find out the percentage of the population ages 65 and older?
When it comes to the number of residents that are in retirement, Florida emerges as the winner in terms of absolute numbers and portion of the population.
Out of a population of nearly 7 million, Arizona has 1,158,320 residents aged 65 and older, or 16.67% of the population. In Florida, senior citizens make up 19.73% of the population — 4,064,376 people out of a total population of 20,598,139.
Number of Retirement Communities
Similarly, if you’re looking to settle down, you might like to know where you’ll have the most housing options. Retirement communities are great places to live safely and stay active with folks of similar age.
Florida has an impressive 726 active adult retirement communities. That’s compared to only 137 communities in Arizona. Of course, regardless of your choice, you’ll find some of the nation’s best and most luxurious retirement communities in both states.
Median Household Income for Those 65 and Older
What’s the use in knowing where you’re going to spend your golden years if you don’t know how much money you’ll have to live there?
People ages 65-plus earn similar incomes in both Arizona and Florida, though one does beat the other. The mean income for an older household in Florida is $43,804, versus $46,152 in Arizona.
Average Retirement Income
Speaking of income, if you aren’t relocating with a partner, you might be wondering what the average retirement income is for a single person. This is how much you’ll have to pay your bills, buy groceries, go out to the movies and so on.
Just as with household income, Arizona wins out ever so slightly. The average retirement income in the Grand Canyon State is $28,648, compared to $27,728 in Florida.
Income Tax Rate Range
Both Arizona and Florida are among the more tax-friendly states for retirees. Neither state taxes Social Security benefits. However, just one of these states offers the benefit of no income tax whatsoever.
Florida levies no income tax, making it the clear winner over Arizona. Arizona’s income tax rate runs between 2.59% and 4.50%, and this unfortunately includes retirement income. Distributions from retirement savings accounts like a 401(k) or IRA are taxed as regular income, although incomes from pensions are eligible for deductions.
A good indicator as to what kind of retirement you’ll be able to afford is the state’s cost-of-living index. The national average is set at 100, meaning the farther below 100 a place is, the more affordable it is.
Though similar, Florida’s cost-of-living index score beats Arizona’s, at 98.2 and 99.6, respectively. Both states are near the national average cost of living.
Cost of Healthcare Index
What about healthcare? As you age, you may find that you have to visit the doctor more often, so figuring out where you’ll have the lowest medical bills becomes more important.
Florida beats Arizona by a truly thin margin. Its healthcare score index is 97, while Arizona’s is 97.2.
Median Price for All Homes
If you want to move to one of these retirement paradises and are looking to buy a home, you’ll need to consider the price. One of these state’s homes is just a tad cheaper.
The median sale price of all homes in Florida is $247,600, about $18,000 better than Arizona’s median price of $265,800. But what should really sway your decision is the listing prices of the city you’re shopping in.
To judge home affordability, the study weighed the percentage of residents aged 65 years and older who spend less than 30% of their income on housing costs. In Florida, 43.40% of older renters spend less than 30% of their income on housing, compared to 52.90% in Arizona.
For homeowners, Arizona is still the more affordable option. In the Grand Canyon State, 73.10% of homeowners aged 65 and older spend less than 30% of their income on housing costs. In Florida, that figure is only 67%.
Median Property Taxes
The general goal of retirement is to keep your expenses as low as possible to compensate for the fact that you’re no longer working. Paying off your mortgage certainly helps. But one thing you’ll never be able to escape is property taxes, which come down to the state you live in.
Here again, Arizona generally has the upper hand. Both the effective property tax rate and the amount paid in taxes are lower than in Florida.
The effective state property tax rate in Arizona is 0.72%, compared to 0.97% in Florida. And, according to the latest census data, the median amount that Arizona residents pay in real estate taxes is $1,591, against Florida’s $2,151.
Neighborhood safety probably wasn’t high on your list of priorities at age 18, but at age 65, things look a little different. Peace of mind should play a key role when deciding where to settle down.
Though Arizona beats Florida on a few price points, Florida has got Arizona beat on a major quality-of-life point: safety.
To evaluate overall safety, the study utilized U.S. News and World Report’s ranking on public safety in each state. Based on property crime rates and violent crime rates, Florida ranks better at No. 30 out of 50, whereas Arizona ranks substantially lower at No. 43.
Make the Right Choice: Safest and Most Affordable Places To Retire Across America
Unless you’re retired from the military, chances are you’re relying on Medicare for health insurance. In fact, according to AARP, 49 million Americans are on Medicare — that’s 15% of the population. But even though Medicare is a national program, your quality of healthcare changes based on the area you live in.
Ranked No. 5 out of 50, Florida is one of the best states for people on Medicare. Arizona has a middling score of 26; not bad, but not great, either.
The overall quality of hospitals in your area may affect where you choose to live. Just like poor Medicare quality, if local hospitals aren’t up to snuff, it could negatively impact your health in the long run.
With a No. 3 ranking, Arizona qualifies as one of the best states in America for hospital quality. Florida comes in at an unimpressive No. 24.
Discover: The 20 Best Suburbs for Retirees
The Ultimate Winner: Florida
Florida edges out Arizona for the win, with eight overall victories versus Arizona’s five. With over 700 retirement communities, Florida is truly a haven for seniors; it has no income or Social Security tax, low listing prices and a cost of living below the national average. It also comes out on top for public safety and Medicare quality.
On the other hand, Arizona’s 65-and-older community boasts a higher median household income and a higher retirement income. The state also has a leg up in housing affordability — for both renters and owners — as well as a lower property tax rate.
But the truth is that the two states scored similarly across many of these categories. While the data is helpful to know before you make any big decisions, there’s a reason why so many older Americans flock to Arizona and Florida: They’re both good choices in retirement.
More From GOBankingRates
Methodology: In order to determine which retiree destination is actually best, GOBankingRates scored Arizona and Florida on: (1) the percent of the population that is 65 and older, (2) the number of retirement communities each has, (3) the median household income for householders 65 and older, (4) the average retirement income collected, (5) the income tax rate range, (6) the taxation of Social Security benefits, (7) the cost of living, (8) the cost of healthcare, (9) the median sale price for all home types, (10) housing affordability for renters, (11) property affordability for homeowners, (12) the median property tax rate, (13) the median real estate taxes paid on units with a mortgage, (14) the public safety rating, (15) the Medicare quality, (16) the nursing home quality and (17) the hospital quality in each state. Factors 3, 5, and 6 were weighted double. Factors 1, 3, 4, 10, 11, and 13 were sourced from the U.S. Census Bureau’s 2018 American Community Survey. Factor 2 was sourced from 55places.com, factor 5 was sourced from the Tax Foundation’s data on 2020 tax brackets, factor 6 was sourced from AARP, factors 7 and 8 were sourced from the Missouri Economic Research and Information Center’s 2019 average annual cost of living index, factor 9 was priced from Zillow’ February 2020 housing data, factor 12 was sourced from Tax-Rates.org’s data on 2020 property taxes by state and factors 14-17 were sourced from U.S. News and World Report’s state rankings. All data was collected on and up to date as of May 27-28, 2020.