For many people, planning for retirement also means choosing a new place to live. After all, you often have the freedom to head nearly anywhere. Thus, allowing you to establish a home in an area that provides you with the perfect lifestyle. But deciding where to go isn’t always easy. Along with ensuring you have access to amenities and entertainment. You have to make sure that the location aligns with your budget. If you want to retire well in Rhode Island, here are some points to consider.
Cost of Living
When you need to gauge how affordable a state is, it’s wise to start with the cost of living scores. These help you compare how expensive a state is to the national average, which is always set at 100, as well as to other states.
When a score is under 100, it’s usually a mark of affordability, while the opposite is true of scores above 100. Additionally, when you compare two states, the one with the higher score is more expensive.
Rhode Island has an overall cost of living score of 119.6, marking the state as one of the more expensive options in the nation. Additionally, it doesn’t have a single category score below 100, so higher costs are common across the board.
Groceries come in with a score of 110.1, while utilities and transportation sit at 126.4 and 105.5, respectively. When it comes to healthcare, that’s a 106.3.
Housing is also quite expensive in Rhode Island. For that category, the state has a score of 129.8. That’s also supported by the average home values. While the average home value in the country is $281,370, Rhode Island’s is $358,452. That’s a difference of $77,082.
While that may cause you to assume that houses are simply nicer in Rhode Island, that isn’t necessarily the case. Instead, it mainly means that if you were looking at two comparable properties, one in Rhode Island and another in an area that mimics the national average, the Rhode Island home would be more expensive than the alternative.
As you try to choose a place to spend your retirement, it’s crucial not to overlook taxes in the state. How much you will need to pay out in taxes can have a major impact on your budget, as well as how long your savings will actually last. After all, you have little choice when it comes to paying taxes, making it a line item you can’t control.
By taking a close look at the tax implications of living in a particular state, you can determine whether you can afford them. Additionally, it gives you a chance to plan, especially if you still have some time to set money aside before leaving the workforce.
Rhode Island does have a state income tax. It relies on a bracketed approach, with rates ranging from 3.75 to 5.99 percent, depending on your income level. Eligible retirees may qualify for an income tax break, however. Depending on your income level and age, your taxable income in retirement may be reduced by up to $15,000.
However, outside of the exemption, all forms of retirement income are potentially taxable. This includes Social Security, 401(k)s, IRAs, private pensions, and more.
Property Taxes Are Higher
Additionally, property taxes in Rhode Island are higher than in many other parts of the country. Couple that with high home values, and it can be quite a burden. Now, seniors do potentially qualify for an exemption, the amount of which varies depending on the municipality. There are also other programs that may lower what you owe, including some for military veterans and individuals with disabilities.
Finally, Rhode Island also has a sales tax. There is one sales tax rate for the entire state, which is set at 7 percent for most purchases. Cities and municipalities cannot add to it, so the sales tax you pay is consistent throughout all of Rhode Island.
Part-Time Job Opportunities
Since Rhode Island is more expensive, retirees may prefer to have a part-time job to help make ends meet. Plus, working can provide you with other benefits, like ensuring you remain active and social.
In many cases, you can take a look at a state’s unemployment rates to estimate the availability of part-time job opportunities. Low rates usually mean positions are available, while higher unemployment typically means you’ll face more competition for open jobs.
As of April 2021, the unemployment rate in Rhode Island was 6.3 percent. That puts the state near the national average, which was 6.1 percent during that month.
Overall, that rate means that finding a part-time position isn’t necessarily easy, but it isn’t incredibly challenging either. As a result, you may want to assume your job search will take a little time or that you’ll need to be more open-minded if you need to nail something down fast.
Best Cities for Retirees in Rhode Island
Once it comes time to retire. You can’t just choose a state; you also need to pick a city. While Rhode Island is a smaller state. You still have plenty of options. Each of which brings something a bit different to the table.
If you prefer a larger city, it’s hard to go wrong with Providence. With Brown University and the Rhode Island School of Design within its borders, you’ll never run short of things to do, thanks to the numerous events the schools hold during the year. Plus, you’ll have solid access to amenities, which is always a good thing.
For retirees that prefer suburbs, Barrington is a solid choice. It’s close to Providence, so you can tap the city for amenities and entertainment. Plus, it has a more close-knit feel, and has less hustle and bustle, though it still feels vibrant.
If you want a taste of New England island life, try Jamestown. While it is connected to the mainland, it still has the same feel, offering up a quiet and relaxed lifestyle to residents. Plus, its bay views are hard to match and is a smaller community, giving it a cozy, small-town vibe.
How Much Money You Need to Retire Well in Rhode Island
Since Rhode Island has a higher cost of living, you may need more in savings if you want to live here and have a comfortable retirement. Overall, being able to tap around $75,181 a year in retirement income could do the trick. With that, you should be able to manage your needs and enjoy some wants, making it possible to retire well in Rhode Island.
Can you think of anything else that would help someone retire well in Rhode Island? If so, let us know. Share your thoughts in the comments below.
If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.
Check out these helpful tools to help you save more. For investing advice, visit The Motley Fool.