How is Rhode Island for Retirement?

The beachside charms of Rhode Island beckon many seniors. From a thriving cultural and academic scene to fantastic medical care, the state has a lot to offer for those wanting to enjoy a little bit of everything in retirement. Here are things to consider when moving to Rhode Island for retirement, including some of its best towns.

Rhode Island is not a favorable state for retirees. While there are a few deductions for seniors, all forms of retirement income (including Social Security) are taxed at between 3.75% and 5.99%. The property tax rate is 1.3%, above the national average, and property prices are fairly high. Local sales tax is better, at 7% with no city/county additions, and some key products are exempt from sales taxes. Estate taxes are also levied here, and the threshold is far lower than the federal threshold at only $1,648,600. 

Is Rhode Island tax-friendly for retirement?

Rhode Island is not tax-friendly to retirees. The state taxes all forms of retirement income, including Social Security retirement income, 401(k) withdrawals, public/private pensions, and IRAs. These taxes range from 3.75% to 5.99%, depending on your income tax bracket.

There is some relief on offer, however. If you have a federal AGI below $88,950 ($111,200 for joint filers), you will be exempt from the state income taxes. After that, you will be taxed the same as your Federal return.

Rhode Island also offers a $15,000 exemption for people of formal retirement age. This can be leveraged with private, public, and military retirement plans. However, as with the Social Security exemption, it falls away, and at a similar threshold. 

Rhode Island does compare favorably to next-door Massachusetts, which is ranked among the most expensive states for retirees. If you’re keen to stay in the local area, but not so keen on Rhode Island’s retirement taxes, consider Connecticut, which has a more favorable retirement tax structure. 

How much are sales taxes in Rhode Island?

Rhode Island has a single statewide sales tax, currently 7%. There are, however, no city or county taxes to worry about. Additionally, Rhode Island does not tax most groceries, medical equipment, and doctor’s prescriptions. This puts Rhode Island slightly higher than the US national average.

The gas tax is $0.37 per gallon, again higher than the US average. They also have some of the most stringent estate taxes in the nation. You may be subject to inheritance tax in this state even if you are not liable federally. However, this will mostly impact larger estates. There is an exemption for estates below $1,648,600 in value. The estate tax rate varies from 0.8% to 16%, depending on the size of the estate.

How much are property taxes in Rhode Island?

Property taxes in Rhode Island are relatively high at 1.30%, compared to the national average of 0.99%. It’s the 15^th highest property tax rate across the nation. Additionally, property costs are high, and most Rhode Island homeowners pay upward of $4,500 in annual property taxes.

If you are over 65, and have a household income below $35,000, there is a property tax exemption. The maximum deduction is $600. Some cities offer a similar tax relief program for seniors, which could double the deduction. 

Pros of retiring in Rhode Island

Landscape

For picturesque ocean views and beach days, you can’t beat Rhode Island. There’s a lot of variety, from rural to ultra-urban and everything in between. 

Close to everything

As a small and well-developed state, Rhode Island is rich in amenities and it's easy to access them. This also fosters a close-knit community feel that is ideal for many retirees without being unwelcoming or overwhelming.

Medical care

Rhode Island has fantastic medical care. It's the third-best state for medical care! As something many seniors worry about, retirement life in Rhode Island is guaranteed to leave you confident in both access to and quality of your medical care.

Culture

Rhode Island is a cultural hub with great academics, fantastic theaters, and plenty to keep you busy. Most of the residents are Italian, Irish, Portuguese, Chinese, French, etc. You can explore food and art from each of these cultures.

Four Seasons

Rhode Island offers four distinct seasons, three of which are pleasant and mild for seniors. Summers are mild, and you can enjoy plenty of outdoor recreation. Fall has beautiful foliage and you can explore the leaves changing colors. Generally, there is mild weather year-round, and you will have plenty of things to do.

Cons of retiring in Rhode Island

Small state

Rhode Island measures about 1,200 square miles, which is considerably smaller than most states. Most towns are closer to each other, and you can drive to the neighboring states to access more services like shopping and entertainment options.

High cost of living

As a trade-off for the fantastic amenities, medical care, and cultural scene, the cost of living in Rhode Island is rather high. The cost of living index in the state is 110.6, against the US national average of 100. You can expect to spend more on basics, and you will need more retirement income to live comfortably.

Tough winters

Rhode Island sees snow in winter- and a lot of it. Depths can reach 3 feet or more. Temperatures often stay below freezing, too, even during the day. The coastal areas are a little more moderate.

Traffic

Rhode Island is a geographically smaller state but with a large population, higher than other states like Oklahoma. It is not uncommon to find hour-long traffic delays on the state's main highways.

Temperamental weather

Rhode Island is not immune to extreme weather like flooding and hurricanes, which could be off-putting for older people.

Tax burden

The tax structure in Rhode Island is not favorable for retirees, and you can expect to pay taxes on all income sources and your estate.

Best places to retire in Rhode Island

Newport

A historic city, Newport is a hub of culture with exquisite beaches, plenty of things to do, and a wonderful vibrancy ideal for an active retirement.

Narragansett

Known as a beach town, Narragansett nestles on the southern state coast and has exquisite views. It has a laid-back atmosphere that’s hard to beat, and you can expect a retirement rich in fresh-caught seafood and plenty of travel.

Warwick

If you’re looking for a suburban feel with plenty of added extras for your retirement, head to the center of the state and Warwick. The coast is just an easy trip away, and the area is rich in parks and outdoor living. 

East Greenwich

While East Greenwich is best known for its educational offerings, it has a calm small-town feel and a close-knit community ideal for retirement. The town itself is charming, and it is easy to access all parts of the state, including the capital, Providence.