Retired Couple Ditched Illinois for Arizona, Seven Years Later Their Tax Savings Have Grown to More Than $100K

At 63, Earl Vittitoe made a decision that changed both his address and his retirement finances. He and his wife, Pat, left Washington, Illinois, and drove west to Oro Valley, Arizona. Seven years later, one part of that decision has become particularly striking.

Their annual property tax bill fell from more than $13,000 to about $3,600. Instead of spending the difference, Earl invested roughly $10,000 a year in stocks. The resulting investment balance has now grown beyond $100,000, according to The Wall Street Journal. The couple's overall assets exceed $3 million, and they expect to spend about $118,000 this year.

The $100,000 figure is therefore not money they saved in taxes. It is the value of investments built from the annual property tax difference and subsequent market growth.

The Tax Difference Added Up

The Vittitoes' Illinois home, outside Peoria, carried a property tax bill of more than $13,000 a year. Their Arizona property costs them about $3,600 annually in property taxes. That created a difference of roughly $10,000 each year. Earl chose to put that money into stocks rather than absorb it into their household spending. After seven years, the investment balance had passed $100,000.

The strategy gave the couple another benefit from their relocation. Arizona's individual income tax rate is 2.5%, compared with Illinois' 4.95% rate. But the income-tax comparison is not as simple for retirees. Illinois does not tax qualifying retirement income, including certain IRA and pension income. Arizona generally taxes retirement income, although some specific exemptions and subtractions apply. The Vittitoes expect that difference to matter when Earl begins taking required withdrawals from his IRA at 73.

Why They Left Illinois

Money was only part of the appeal. Earl had taken a buyout at 59½ after working for a large manufacturing company. His job involved designing computer systems used to track parts and software required for manufacturing. The couple had also considered moving to Hawaii, where Earl attended high school.

Their plans changed after Earl's aunt moved to Oro Valley in 2015. The Vittitoes visited and fell for a nearby 55-plus community with pools and a golf course. The Arizona lifestyle soon became as important as the tax calculation. Earl has particularly embraced the warmer climate. He recalled being delighted when he gave his snowblower to a friend in Illinois.

In Oro Valley, he lifts weights and sometimes rides the local bike paths at 5 a.m., before the Arizona heat becomes intense. He also serves as president of his homeowners association, spending time on meetings and emails.

A $3 Million Retirement Portfolio

The Vittitoes have more than $3 million in assets. About $2 million is held in IRAs and roughly $1 million in a taxable brokerage account. They keep about $80,000 in cash and invest most of the remainder in stocks. Their Roth IRA includes about $170,000 in high-growth investments, including Nvidia and SpaceX.

Their traditional IRA and taxable account contain dividend-paying stocks that generate about $189,000 in income. Earl largely reinvests that income. The couple receive around $60,000 a year in Social Security, while Earl's pension provides another $40,000. They expect to spend about $118,000 this year. Travel accounts for roughly $30,000 of that spending.

A Move That Changed More Than Their Tax Bill

The Vittitoes' experience illustrates why moving to a lower-tax state does not automatically mean every retirement expense falls. They spend more on petrol in Arizona but less on groceries. They have no debt and continue to allocate a significant part of their budget to travel. The bigger change has been how they use the money created by the lower property tax bill.

Rather than simply spending the roughly $10,000 annual difference, Earl invested it. Over seven years, those contributions and investment performance produced a balance exceeding $100,000.

The couple also say they have no regrets about leaving Illinois. For them, the move delivered more than a smaller property tax bill. It brought a different climate, a new community, and an investment pot that has grown substantially from money that once went towards their annual housing costs.