Is Florida or Arizona Better for Retirement? The Answer Might Surprise You

As you’re approaching retirement age, you’ve probably run the numbers to see how much you need for a stress-free retirement . But one of the biggest factors in how much you will need depends on where you decide to live.

Two popular destinations for retirees are Florida and Arizona, but which one is the best for you? While the sandy beaches are calling your name, the Sunshine State isn't necessarily the retirement paradise you might think it is.

Here are some things to consider before making your final decision.

1. State taxes

Florida doesn’t have a state income tax, which helps keep more money in your wallet whether you’re working or retired. The state also doesn’t tax Social Security, retirement account withdrawals, or pensions.

On the other hand, Arizona will tax withdrawals from your retirement accounts, and pensions are also partially taxed. And unlike Florida, it does have a state income tax.

Winner: Florida

2. Weather

Want to retire somewhere that doesn’t require shoveling snow? Then Arizona and Florida are both great options for you.

Arizona can get pretty toasty with highs reaching above 100 degrees in some parts of the state in July. Florida’s summer highs are closer to 90 degrees.

But one big factor to consider isn’t the heat but the humidity. Arizona is in the desert, which means it has a dry heat, while Florida’s humidity may make it unbearable to be outside during the summer.

Winner: Arizona

3. Housing costs

Housing is more than just about the price, which is why this is a tough factor to use when deciding where to live. It is also going to vary greatly depending on where in each state you want to live.

In August, the median sale price in Arizona was $438,700 compared to a median sale price of $403,100 in Florida. That gives Florida the advantage for now.

It's also important to consider where home prices are trending in each area to predict how they could change over time. Florida's homes were down 0.48% year-over-year in August compared to Arizona's, which were up 1.0%.

Winner: Florida

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4. Homeowners insurance

Florida is going through a homeowners insurance crisis with companies pulling their coverage of homes in the state due to hurricanes. It’s important to factor in homeowners insurance when calculating your housing costs.

A report from the governor’s office stated that Florida accounts for 9% of the country’s homeowners insurance claims and 79% of the country’s home insurance lawsuits, making companies skittish about insuring homeowners. If they do insure homes, the premiums may be higher than the national average.

The state’s high risk of damage from natural disasters is a major factor in increasing your costs.

Winner: Arizona

5. Food

In Arizona, expect your food bill to be $604 per month, making it the 23rd most expensive state, according to livingcost.org.

If you want to dine out more often when you’re retired, the average cost for dinner for two at a restaurant is $66.50. Florida, however, is going to cost you more.

The average monthly food bill in the Sunshine State is $622, putting it 17th on the list when it comes to the most expensive food bills by state. The average bill for a meal for two at a Florida restaurant is $73.90.

Winner: Arizona

6. Gas prices

Whether you live in Florida or Arizona, there are plenty of interesting places to visit within the state. Arizona is home to the Grand Canyon, high-desert retreats, and just a short drive to Las Vegas.

Florida, meanwhile, is home to Everglades National Park, beach vacations, and plenty of theme parks for you and your family.

But driving is going to be more affordable in Florida, where the average price for a gallon of gas is around $3.10 compared with $3.35 in Arizona. For comparison, the national average is around $3.20, according to AAA.

Winner: Florida

7. Age

Age is just a number, but how important is that number in your living situation?

According to the U.S. Census Bureau, 21.6% of Florida’s population is over 65 compared with 18.8% in Arizona. Depending on the city you choose, though, that number can shift greatly.

That could make a big difference if you want more options like 55+ communities or being around people your own age instead of a multi-generational community with families or younger people around.

Winner: It depends on what you're looking for and where you live in each state.

8. Doctor’s visit

One thing you have to think about is the additional doctor visits you may need to make as you get older, and the costs of those visits could add up.

A doctor’s visit in Florida will cost you an average of $115 compared to an average of $106 in Arizona. And remember that stat about the number of residents over the age of 65 in Florida and Arizona.

Doctors may be more likely to have a bit more experience dealing with older patients in the Sunshine State, which could give it an additional advantage over its Western competition.

Winner: Arizona

9. Total cost of living

One big factor to consider is how much it costs to live somewhere, especially if you’re on a fixed budget. States like California, New York, or Hawaii are known to have a high cost of living, which could sink your fixed income when you’re retired.

But what about choosing between Arizona and Florida? When comparing two major cities (Phoenix and Tampa) in the state, the total cost of living is greater in Florida.

Consumer prices were 12.7% higher in Florida, groceries were 27.8% higher, rent prices were 14.7% higher in Florida, and local purchasing power was 11.9% lower in Arizona.

Winner: Arizona

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So which state wins?

Perhaps warm, dry heat is what you would prefer when you step out of your home each morning. Maybe you love the ocean. Or you could be on a budget and want to live somewhere with the smallest tax burden.

It's tight, but Arizona comes out on top in five categories compared to Florida's three. And considering that you won't be working full-time and your sources of income may change, Arizona's overall lower cost of living might make it more affordable.

But only you can decide which is best for you. There are benefits to living in either Arizona or Florida for your retired years so make sure you sit down and prioritize what you consider to be the most important factors when it’s time for you to move.

Bottom line

At least a few years before you retire, you should take stock of your financial situation. You may need to find ways to tighten your budget or pick up an extra job or side hustle to earn more to reach your goals.

You could also find out that you’re on the right track and may even be able to retire early and move to Arizona or Florida sooner than you expected.

Remember to factor in all your expenses and all your investments to find the right balance that you can get on the road to retirement.

Money tips that can work for everyone

No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.

Focus on paying off your debt. Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.

Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.

Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).