Are you ready to retire in Arizona? It may cost more than you think, according to a new study.
The Investopedia study shows how much the average American needs to save to retire at 65, how much to expect from Social Security funds and how much the average retiree spends per year.
Although Investopedia has outlined the average cost of retirement across the nation, housing costs can vary widely, so the study also shows retirement costs per state.
Arizona is known for its large retirement community because of its year-round warm weather, luxury golf courses and zero state tax on Social Security benefits, estates and inheritances.
However, Arizona's housing costs are higher than those in most states, creating pros and cons for retiring in the Grand Canyon state.
How much does it cost to retire in Arizona?
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The average single person needs an $810,000 nest egg to retire comfortably in Arizona, according to Investopedia.
The amount assumes that retirees follow the 4% rule, which states retirees should withdraw 4% of their retirement fund in the first year of retirement, then adjust for inflation each year after that; ideally, this should last retirees 30 years.
Investopedia estimates that the average retiree will spend $56,200 a year, which covers entertainment, travel, housing, groceries and more.
The annual Social Security income pays $23,700, leaving a $32,500 gap between the average annual spending and Social Security income.
Arizona is in the middle of affordable states to retire in. The average amount needed to retire in Arizona is slightly lower than the national average, which is $898,000. It's also important to note that Investopedia's estimated nest eggs do not account for the state income tax on Social Security benefits, which Arizona does not have.
What is the cheapest state to retire in?
Comparatively, Arizona is a median state when it comes to retirement affordability.
The cheapest state is North Dakota with an average retirement savings of $644,00. It's followed by Arkansas, Mississippi, West Virginia and Iowa.
The most expensive states to retire in, according to Investopedia, are New Jersey and Hawaii, with the average retirement savings being $1.2 million.
Rounding out the top four are California and Washington, D.C.
