If you’ve ever asked, “How much do I really need to retire comfortably here in Arizona?”

If you’ve ever asked, “How much do I really need to retire comfortably here in Arizona?”, the honest answer is: it depends where you live, how you spend, and how much money you’re quietly handing over in fees and taxes. A $2 million nest egg goes a lot further in Chandler or Surprise/Happy Valley than it does in Paradise Valley…and cooling bills in July can surprise anyone in Phoenix and the surrounding suburbs.

One more thing most retirees miss: if you’re paying a 1% advisor fee, that’s another $20,000 per year on a $2 million portfolio ($400,000 over 20 years). That’s real money that could fund family trips, healthcare, or college for grandkids.

So let’s unpack what $2 million really buys you in Arizona when you factor in local costs, taxes, and fees.

What It Really Costs to Live in Arizona (for Retirees)

The Bureau of Labor Statistics pegs average retiree spending around $61,000 per year, but many Arizona retirees land closer to $70,000–$80,000 thanks to higher cooling costs, HOAs, and home maintenance common across Phoenix, Scottsdale, and nearby suburbs.

Local snapshot (before taxes and fees):

Zillow (2025 medians), APS energy data, TaxFoundation property-tax rate context.

If you add a 1% investment fee on $2 million, you’ve given up $20,000 more each year meaning an $80,000 plan just became $60,000 in practical spending before taxes. For more on how those advisor and fund costs add up, see my related article: Am I Paying Too Much in Advisor and Investment Fees?

Housing and Utility Realities in Phoenix Metro

Cooling: A typical Phoenix-area home might see ~$231/month in electricity, but larger homes in Paradise Valley can run $400–$500/month during peak heat or monsoon season.
Property taxes: Arizona’s effective rate is roughly 0.45%–0.55%—low versus many states—but insurance, HOA, pest/termite prevention, landscaping, and roof/HVAC upkeep make up the difference. Plan $8,000–$15,000 per year.
Monsoon maintenance: Budget 1–2% of home value per year for ongoing maintenance across Phoenix, Chandler, Surprise, and Happy Valley.

That’s why retirees in Chandler or Surprise often feel more “financial breathing room” than those in high-end areas like Paradise Valley or Arcadia because the lifestyle costs stack up quickly.

So How Far Does $2 Million Really Goes (By City)

Using a 4% withdrawal rate, your $2 million portfolio targets $80,000 per year before taxes and fees.

• Paradise Valley: ~$75,000 in living costs leaves ~$5,000 before taxes or travel.
  
• Chandler: ~$60,000 in costs leaves ~$20,000 discretionary.
  
• Surprise / Happy Valley: ~$55,000 in costs leaves ~$25,000 discretionary.
  

Now subtract fees and taxes. Pay $20,000 in advisor fees and ~$10,000 in taxes and your spendable income can slip toward $50,000–$55,000. That’s why zip code, fees, and withdrawal strategy matter so much. To learn how much of your income is really yours to keep after fees and taxes, check out my post Retirement Planning Without Taxes: Why It Costs So Much (and How to Fix It).

Some Arizona Tax Rules You Should Know

Here’s the good news: Arizona is one of the most tax-friendly states for retirees.

What Arizona doesn’t tax

• Social Security benefits
  
• Up to $2,500 of certain pension/annuity income (65+)
  
• No Arizona estate or inheritance tax
  

What Arizona does tax

• IRA/401(k) withdrawals, most pensions, and ordinary income at a flat 2.5%
  
• Dividends and capital gains flow into AZ taxable income (with federal rules still applying)
  

The flat 2.5% state income tax and low property tax make Arizona a great place to retire—but only if you coordinate when and how you withdraw income.

So what you need to know is the Timing and Withdrawal Strategy – Your “Tax Planning Window” 

If you’re in your early 60s and not yet taking RMDs, you’re in the sweet spot—what I call the Tax Planning Window.

This is when you can do partial Roth conversions, moving funds from your pre-tax IRA to your Roth IRA while staying in a lower bracket (usually 22–24%).

Why it matters:

• You pay taxes now at controlled rates instead of higher ones later.
  
• Future Roth withdrawals are tax-free, don’t affect your Social Security taxation, and won’t push up your Medicare premiums (IRMAA).
  

Pair that with Arizona’s low flat tax, and you’ve got a powerful opportunity to create a lifetime tax-efficient income stream.

For a deeper look at the math behind smart withdrawal planning, see Finding Your Safe Withdrawal Rate in Retirement.

Stack that with Arizona’s flat 2.5% and you can save tens to hundreds of thousands over a 25–30 year retirement, especially for households in Phoenix, Chandler, Oro Valley, Tucson, Surprise, and Paradise Valley.

The Real Arizona Retirement Equation (Quick View)

*State tax varies with your actual taxable income and mix of Social Security, Roth, and pre-tax withdrawals.

You can absolutely retire comfortably on $2 million in Arizona. Whether you feel comfortable or stretched comes down to location costs, tax timing, and your advisor’s fee model.

Final Thoughts

Arizona’s sunshine, low taxes, and relatively affordable property values make it a dream destination for retirees from states like California and Illinois.

But even the perfect weather can’t fix poor math.

If you’re paying 1% advisor fees, ignoring tax timing, or not optimizing your spending for your city, you could be losing hundreds of thousands over retirement.

As a flat fee fiduciary who works remotely, I work with retirees across Paradise Valley, Phoenix/Scottsdale, Chandler, Surprise/Happy Valley, Oro Valley, and Tucson. I help you integrate your entire financial picture—financial planning, tax planning, estate planning, retirement planning, and cash flow planning—all under one transparent flat annual fee. No percentages, no commissions, no surprises.

Want to see your personal “Arizona retirement math” by city?
Schedule a Retirement Fee & Tax Clarity Call and I’ll run the numbers for your exact zip code, home, and portfolio mix.

Raman Singh, CFP®

Your Personalized CFO

Important Disclosures

The information provided herein was obtained from sources believed to be reliable and is believed to be accurate as of the time presented, but it is provided “as is” without any express or implied warranties of any kind.

This material is intended for informational and educational purposes only and should not be construed as individualized investment, tax, or legal advice. You should consult with your own qualified investment, tax, or legal advisor before making any decisions based on this material.

Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Withdrawal strategies and tax outcomes will vary depending on individual circumstances, account types, tax brackets, and market conditions. No strategy can guarantee success or prevent losses.

Investment advisory services are offered through Singh PWM, LLC, a registered investment adviser offering advisory services in the State of Arizona and other jurisdictions where registered or exempted.
Singh PWM, LLC is a registered investment advisor offering advisory services in the State(s) of Arizona and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute.