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  • Writer's pictureMike Rogers

Retirement Planning Minnesota: A Simple Guide

Updated: Mar 22

A Simple Guide to Retirement Planning in Minnesota

A Simple Guide to Retirement Planning in Minnesota

Mike Rogers is a fiduciary financial advisor with over 30 years of experience in the financial services industry as an investment advisor and financial planner. He founded 360 Financial in 1995 and holds series 7 and 63 security registrations with LPL Financial.

Whether you’re ten, twenty, or even thirty years from retirement, it’s important to start planning. Review the basics of retirement planning in Minnesota and get started. It’s never too early to start planning for retirement. Part of your planning will be considering expenses, taxes, and investments and how you want to live during retirement. 

Retirement Planning Topics in this Article

The top five things you should consider when planning your retirement in Minnesota are the state tax laws, cost of living, healthcare costs, how the climate may affect your expenditures during retirement, and estate planning. 

  1. Tax Implications: Minnesota taxes Social Security and most other retirement income.

  2. Cost of Living: Minnesota’s cost of living can impact your retirement budget, especially housing and healthcare costs.

  3. Healthcare Planning: Consider supplemental insurance and HSAs for healthcare costs.

  4. Climate: Minnesota’s cold winters may influence living and travel expenses.

  5. Estate Planning: Minnesota-specific estate planning can ensure a smooth transition of assets.

Understanding Minnesota’s Tax Policies for Retirement Income

Minnesota’s tax policies can significantly impact your retirement income. The state taxes Social Security benefits to the same extent as the federal government. It also taxes most other forms of retirement income, such as pensions and retirement account withdrawals.

As of 2023, the following is true of tax rates in Minnesota during retirement:

  1. In Minnesota, your Social Security income is partially taxed.

  2. All withdrawals from retirement accounts are fully taxed in Minnesota.

  3. Public and private pension income is fully taxed.

Social Security Benefits: Maximizing Your Retirement Income

To maximize your Social Security benefits in Minnesota, you may want to consider delaying your benefits until you reach your full retirement age or older. The longer you wait, the higher your monthly benefit will be. Speak with your financial advisor about this to identify when is the right time for you to start taking Social Security.

retirement planning - a happy couple enjoying retirement

A Minnesota financial advisor can provide expert advice tailored to your personal financial situation.

The Role of a Minnesota Financial Advisor in Retirement Planning

A Minnesota financial advisor can provide expert advice tailored to your personal financial situation. They can help you understand tax implications, investment strategies, and create a comprehensive retirement plan. 

If you don’t want to be worried about retirement for the next ten, twenty, or even thirty years, it would be wise to speak with a financial advisor and create a financial plan. Your financial advisor will be your guide, helping you towards your financial goals.  

Employer Retirement Plans: 401(k)s, 403(b)s, and IRAs

Employer-sponsored 401(k), 403(b) plans, and Individual Retirement Accounts (IRAs) are tools for saving for retirement. All of these offer tax advantages that can help your savings grow more rapidly. Minnesota employers may offer a match on 401(k) or 403(b) contributions, effectively giving you free money for your retirement savings.

There are also Roth 401(k)s, 403(b)s, and IRAs that have distinct tax advantages over the traditional plans. Talk with your financial advisor about what contribution is right for you.

Minnesota’s Public Employee Retirement Association (PERA)

PERA provides retirement benefits for public employees in Minnesota. If you’re a public employee, understanding the benefits and contribution requirements of PERA is crucial for your retirement planning.

In some cases, it may make sense to choose a lump-sum option rather than taking lifetime income. In addition, there are a number of income options available (joint life for the life of your spouse, individual life for you, individual life with period certain). Your advisor can help you decide what option is best for you.

How to Plan for Healthcare Costs in Retirement in Minnesota

Even with Medicare, healthcare can be a significant retirement expense. Consider options like Medigap or Medicare Advantage plans for additional coverage. Also, a Health Savings Account (HSA) can be used to save for healthcare costs tax-free.

If you are retiring prior to age 65, you will want to have good estimates for the costs of healthcare. You would likely be relying on COBRA insurance from your past employer or on health insurance that can be found through the MN health insurance exchange (MN Sure)

Estate Planning - a beautiful home on the lake

Downsizing can reduce living expenses in retirement and free up capital that you can invest.

10 Tips for Downsizing Your Home for Retirement

Downsizing can reduce living expenses in retirement and free up capital that you can invest. When looking for a new home, consider location, accessibility, and proximity to healthcare services. Also, consider the emotional aspects of leaving home where you’ve lived for many years.

1 – Evaluate your Needs: Assess your lifestyle and determine what you actually need in your new home. Think about the number of bedrooms, outdoor space, proximity to family and friends, and access to healthcare.

2 – Sort your Stuff: Go through each room in your house and sort your belongings into keep, sell, donate, or discard piles. Be ruthless. Only keep what you absolutely need or love. Before you give things away, check with family members to see if they want any items. You might be surprised by what people want!

3 – Plan your Space: Once you’ve chosen your new home, measure the space and plan where your furniture will go. This will help you decide what to take with you.

4 – Sell Unwanted Items: Sell items you no longer need through a garage sale, online marketplaces, or consignment stores.

5 – Digitize (Some Of) Your Memories: If you have many photos, documents, or memorabilia, consider digitizing them to save physical space.

6 – Consider Storage: In your new home, consider investing in multi-purpose furniture with built-in storage or vertical storage solutions to maximize space.

7 – Downsize Gradually: Don’t try to downsize all at once. Start months before your move, tackling one room at a time.

8 – Get Help: Enlist the help of family members, friends, or professional organizers. They can provide emotional support and practical help.

9 – Think about Accessibility: If you’re moving for retirement, look for a home that can accommodate your needs as you age, such as single-story living or wheelchair accessibility.

10 – Embrace the Change: Downsizing can be emotional. Focus on the benefits, such as less maintenance, lower costs, and more freedom to enjoy your retirement.

The Impact of Minnesota’s Cost of Living on Retirement Budgets

Minnesota’s cost of living is slightly higher than the national average. Consider this when planning your retirement budget, especially when it comes to housing, healthcare, and taxes. When you work with a financial advisor, they’ll help you plan for retirement taking into account what you’ll be spending when you retire.

You might also consider the trade-offs of moving out of Minnesota when you retire. By moving to an area that has a lower cost of living or that has a lower state tax bracket, you might be able to afford to retire earlier or be able to spend more on travel and other goals in retirement.

If you’re creating your own financial plan, read more about the six steps in financial planning. Begin creating a financial plan that will help you achieve your financial goals and a relaxing and comfortable retirement. 

Utilizing Health Savings Accounts (HSAs) for Retirement in Minnesota

HSAs can be a great tool for saving for healthcare costs in retirement. Contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free. After age 65, you can withdraw funds without penalty, but you will pay income tax on non-medical withdrawals.

If you do decide to utilize HSAs for retirement, you should invest them just like you are investing your other retirement accounts. Talk to your financial advisor about what would be appropriate investments for your HSA plan. 

Creating a Retirement Budget

Start with your situation today. Review your total income, and subtract the amount you are saving and the amount you are paying for taxes. Now you’ve identified the amount of your current spending.

Will this change in retirement? Do you have a mortgage you will pay off? Will it remain the same in retirement? Are there any travel goals or other budget expenses you would like to add?

This will give you a good idea of how much income is needed in retirement, and you can work with a financial advisor to create a plan for getting that income.

Estate Planning in Minnesota

Estate planning involves more than just creating a will. It may also involve setting up trusts, naming beneficiaries for your retirement accounts, and creating a power of attorney and healthcare directive. 

A good financial advisor can help you with your estate planning and discuss the benefits of different legal documents. When it comes to actually drafting the legal documents you want in place, a Minnesota estate planning attorney can guide you through this process.

Long-Term Care Planning for Retirees in Minnesota

Long-term care can be a significant expense in retirement. Consider long-term care insurance, and look into Minnesota’s Medical Assistance program, which can help pay for long-term care if you qualify.

Minnesota has a tax deduction for long-term care premiums in qualified long-term care policies. To talk about long-term care insurance with an advisor, schedule a call with a financial advisor at 360 Financial.

Inflation and Your Retirement Savings

Inflation can erode your purchasing power in retirement. Consider investment strategies that can help your savings keep pace with or outpace inflation, such as investing in stocks or inflation-protected securities.

Connect with a Fiduciary Financial Advisor in Minnesota


If you need a wealth management team to help you achieve your big-picture goals, we recommend scheduling a call with a financial advisor or financial planner at 360 Financial.

360 Financial is one of Minnesota’s best independent wealth management firms. We work with clients in Minnesota and across the US. If you’d like to work with a team that always puts your best interests first and is committed to helping you create a lasting legacy, please get in touch. 

Mike Rogers

About the Author

Mike Rogers

Mike Rogers is the founder and president of Minnesota-based financial advisory firm 360 Financial. As the founder, Mike’s priority is that 360 Financial always serves the clients with empathy, integrity, and honesty. This customized, client-centric approach allows the firm to help clients decipher between the things they can control and what truly matters. In other words, Mike understands that money is not the end-all-be-all; instead, it’s the “how” that fuels the “why” to the question: “What’s important to you?”

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At 360 Financial, our clients come first. You deserve personalized attention. You’ll be happier and more confident in your financial future when you have an advisor who always puts your needs and best interest first. Schedule a 15-minute introductory call with a 360 financial advisor to see how we can help with your retirement, succession, tax, and estate planning.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.


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