Retiring in Minnesota? 10 Steps to Take If You're Planning on Retiring in MN
- Mitch Zweber
- Oct 9
- 12 min read
Updated: 1 day ago
If you’re planning on retiring in Minnesota, the first thing to know is that it’s not the most tax-friendly state.
Income tax rates can reach nearly 10% and there’s an estate tax on assets above $3 million per person. That makes proper planning essential.
Anyone retiring in Minnesota needs a plan that includes strategies for withdrawals, Roth conversions, and estate transfers, often mapped out 10 or more years ahead. However, the trade-off for high taxes is excellent healthcare, a strong quality of life, and the chance to enjoy everything from outdoor recreation to vibrant Twin Cities amenities.
This guide is designed to provide you with clear answers to your most pressing MN retirement questions and highlight both the pros and cons of retiring in Minnesota.
Mitch Zweber is a financial professional focusing on portfolio management, retirement planning, estate planning, and goal funding. His approach to financial planning is holistic, addressing each client's needs, goals, and aspirations to build an individualized plan to pursue financial success. He believes in educating clients to empower them to make confident financial decisions.
Key Points
Minnesota is not a tax-friendly state, with income tax rates near 10% for high earners.
The state has an estate tax starting at $3 million per person, which includes your home, life insurance, and property, not just investments.
Planning ahead is essential; tax and estate strategies need to be in place years before retirement, not after.
Retirees should have a financial plan based on maintaining (not cutting) their lifestyle spending, especially in their early retirement years.
Minnesota offers a high quality of life, with outdoor recreation opportunities and a thriving arts and sports scene.
Healthcare is a major advantage, with world-class providers like Mayo Clinic and strong local systems.
Most people retire here either to enjoy the lifestyle or to be closer to family, with popular areas including Twin Cities suburbs, Duluth, Brainerd, Ely, and the North Shore.
Table of Contents
Is Minnesota Tax-Friendly for Retirees?
When people ask me about retiring in Minnesota, I’m upfront: this is not the most tax-friendly state.
We have income state income tax rates that can approach 10% for high earners, and we’re one of the few states with an estate tax. That estate tax starts at $3 million per person and includes everything you own, including your home, life insurance, property, and investments. It’s easy for people to underestimate their taxable estate because they only look at their investment accounts.
For high-income earners, the numbers can really add up. If someone makes $1 million in a year, nearly $100,000 could go straight to the state in taxes. That’s why Minnesota is rarely chosen for its tax benefits.
If your goal is to retire in Minnesota, planning ahead is key.
You don’t want to have a surprise tax hit or a suboptimal estate plan.
Should You Retire in Minnesota?
From the cabin life on our 10,000+ lakes to a thriving arts and sports scene, Minnesota is a great place to live.
In fact, most people who live and retire here do so for lifestyle or to be closer to family. Minneapolis and the Twin Cities have every amenity you could ask for, so you won’t be missing out on anything when you retire here.
When planning your Minnesota retirement, the most important step is to work with a financial advisory firm who understands the state’s rules. Having a long-term plan (often 10 years or more) lets you withdraw assets, manage taxes, and pass on wealth in the most efficient way possible.
If you have the income to live comfortably in Minnesota, then it's a great place to retire.
10 Steps to Take If You're Planning on Retiring in Minnesota
1. Decide on Your Retirement Date
There’s no mandated retirement age in Minnesota.
The age you choose to retire depends on when you want to begin taking Social Security benefits, pension distributions, or withdrawals from retirement accounts. Understanding how your age impacts those benefits is essential to deciding the right time to step away from work.
2. Review the Cost of Living in Minnesota
Minnesota's cost of living is close to the national average, though it varies by region.
Housing tends to be more affordable outside the Twin Cities, while groceries, healthcare, and day-to-day expenses are fairly consistent statewide. Healthcare costs are often higher in retirement, but Minnesota’s strong system ensures you receive value for what you spend.
3. Learn About Taxes in Minnesota for Retirees
Minnesota taxes most forms of retirement income, including Social Security, for certain income levels.
Property taxes also vary depending on where you live, with suburban areas around the Twin Cities typically higher than rural communities. Seniors with a household income below $96,000 may qualify for the Senior Citizens' Property Deferral Program.
Knowing how these taxes affect your income streams is critical to building a sustainable retirement plan here.
2025 Income Tax Brackets: 5.35% ($0-$32,110); 6.8% ($32,110-$106,730); 7.85% ($106,730-$197,450); 9.85% (over $197,450)
Social Security: Taxed if federally taxable.
4. Explore the Best Places to Retire in Minnesota
There's a place for everyone in Minnesota.
For those who want to stay close to the Twin Cities, suburbs like Wayzata, Minnetonka, Maple Grove, Eden Prairie, Woodbury, Lake Elmo, Prior Lake, and Lakeville are popular choices. They offer strong communities, good amenities, and proximity to Minneapolis.
If you’re looking further out, Duluth, Grand Marais, Two Harbors, and Ely on the North Shore are all attractive for retirees who love the outdoors.
The Brainerd area is another popular spot, with lakes, golf courses, and resorts that make it feel like a destination in itself.
5. Plan Your Housing
Housing is one of the biggest variables in retirement costs.
Real estate prices in the Twin Cities suburbs are higher than in small towns or northern Minnesota, but you’ll find more amenities if you live close to Minneapolis.
Deciding whether you want a condo in the city, a home in the suburbs, or a cabin up north will shape both your budget and lifestyle. According to data from Zillow, the average Minnesota home value is $344,191, while in affluent areas such as Minnetonka, the average value of a home is $474,688. (September 29, 2025)
6. Consider Roth Conversions and Timing Social Security
One of the biggest financial planning strategies retirees use today is Roth conversions.
With federal tax law currently more favorable than it has been in the past, converting funds into a Roth IRA aims to create significant long-term tax savings.
The other key decision point is when to take Social Security. The timing of Social Security benefits fits into your overall income strategy. Coordinating these choices with your broader financial plan makes a meaningful difference in retirement, especially in a state like Minnesota that features higher tax rates.
7. Assess Your Discretionary Spending
Most people’s fixed expenses (utilities, food, housing, insurance, etc) don’t change much in retirement.
The real lever is discretionary spending: travel, hobbies, entertainment, and lifestyle choices. This is where retirees have the most control, and it’s often the biggest factor in whether someone can retire comfortably.
If you want to retire earlier or in a more expensive state, this discretionary category becomes even more important.
You’ll either need to save more during your working years or adjust discretionary spending in retirement. That’s the trade-off, and it’s where people have the most flexibility to make retirement affordable. Understanding your spending patterns is essential to building a retirement plan that actually works.
8. Plan to Maintain Your Lifestyle Spending
An old rule of thumb says you’ll need 80% of your pre-retirement income once you retire.
In reality, most people maintain their lifestyle, especially during the early “go-go” years when they’re traveling, exploring, and doing everything they’ve planned for. Discretionary spending usually has a big impact on retirement affordability. That’s why it’s so important to build a financial plan based on your real lifestyle, not a number you hope will work.
If you're planning on retiring in Minnesota, consider what kind of lifestyle you'd like to enjoy during your retirement and account for that when planning income streams.
9. Create a Retirement Income Plan
To retire comfortably in Minnesota, your retirement savings and income plan should match your lifestyle and the state’s cost of living.
Your plan should integrate pensions, Social Security benefits, and investment withdrawals in a way that minimizes taxes while keeping income steady year after year.
In Minnesota, that means paying attention to how the state taxes Social Security and other retirement income, as well as factoring in property taxes if you plan to own a home here.
A financial advisor can help you model different income streams, structure Roth conversions, and plan withdrawal timing so you don’t outlive your savings and can still enjoy the lifestyle you’ve envisioned.
10. Put Together Your Retirement Planning Team
Planning should happen years in advance.
Tax and estate strategies can’t be implemented after the fact, so having a long-term plan (often 10 years or more) is essential. That’s how you manage withdrawals, minimize taxes, and transfer wealth efficiently. If you wait until the last minute, you lose the ability to make meaningful changes.
Make sure you find a good fiduciary financial advisor or holistic wealth management team who can help with retirement planning, income planning, estate planning, and investment management.
What Are the Pros of Retiring in Minnesota?
Access to Quality Healthcare in Minnesota
One of the biggest benefits of living in Minnesota is healthcare.
The Mayo Clinic is world-renowned and right in our backyard. Minnesota consistently ranks high in the quality of its local healthcare systems. In fact, Minnesota was recently ranked the third-best state for national health care.
The Twin Cities Area has many health care options to choose from. Just some of your options include:
Allina Health in Minneapolis/St. Paul
M Health Fairview in Minneapolis and the surrounding areas
HealthPartners in St. Paul/Bloomington
Hennepin Healthcare in Minneapolis
Mayo Clinic Health System in Rochester and the surrounding areas
For retirees, having excellent healthcare is no small thing. It’s one of the most important factors in choosing where to live.
Recreation
Northern Minnesota offers endless outdoor recreational activities, from fishing and boating on Lake Superior to hiking along the North Shore. Other common outdoor activities Minnesotans pursue include golfing, hunting, biking, canoeing, kayaking, skiing, ATVing, and snowmobiling.
In the Twin Cities, you’ll find an extensive park system, biking trails, and easy access to numerous lakes right in the metro area. Referred to as the land of 10,000 lakes, Minnesota is known for its summer lake life.
Culture
The Twin Cities are home to professional sports teams, including an NFL, MLB, NBA, and NHL team. It also features theaters, museums, and a vibrant music scene. In northern Minnesota, smaller towns like Duluth and Grand Marais bring a mix of local art, music festivals, and community traditions.
Community
Minnesota is known for “Minnesota Nice,” and that reputation rings true in both small towns and larger cities. Minnesotans are just plain friendly. In the Twin Cities, retirees find strong community centers and clubs, while northern towns offer close-knit connections and neighborly support.
What Are the Cons of Retiring in Minnesota?
High Taxes
Minnesota has some of the highest state income taxes in the country, and it also imposes an estate tax starting at $3 million per person. Retirees need to plan carefully to avoid surprises and optimize withdrawals and transfers.
Long Winters
Winters in Minnesota are long, cold, and snowy. For retirees who dislike harsh weather, this can be a major downside, especially compared to warmer states like Florida or Arizona. (Though nothing beats summer in Minnesota or the change of colours in the fall.)
Cost of Living in Metro Areas
While much of Minnesota is affordable, the Twin Cities and their suburbs can be more expensive. Housing and property taxes in these areas are higher than in rural towns or northern communities, so where you live will strongly affect your retirement budget.
Can Living in More than One State Complicate Taxes?
Living in more than one state can complicate taxes.
Some retirees own property in more than one state, and that can make your tax situation tricky. Where you’re considered a resident depends on where you spend the majority of your time.
The rule is 183 days, which some people refer to as the six months and one day rule.
According to the MN Department of Revenue, if you "spend at least 183 days in Minnesota during the year," then you are considered a resident of Minnesota for tax purposes.
In addition, any part of a day counts as an entire day.
But for people who split their time between Minnesota and places like Florida, Arizona, or Wisconsin, getting this wrong can lead to paying taxes in more than one state.
Here’s where people run into trouble:
Split residency: If you spend 5 months in Minnesota and 7 months in Florida (which has no income tax), but you keep your driver’s license, voter registration, or primary home in Minnesota, the state may still consider you a Minnesota resident. In that case, you’d still owe Minnesota income tax, even though you thought you were living in Florida.
Dual residency issues: If you have strong ties to two states (like property, bank accounts, and mailing addresses in both places) and you don’t establish one as your clear legal residence, both states might claim you as a resident. That can lead to double taxation unless there’s a reciprocity agreement — and Minnesota doesn’t have that with all neighboring states.
EXAMPLE: Someone could spend 6 months in Wisconsin but keep their primary home in Minnesota. If both states argue residency, you could end up filing returns and paying in both. Resolving that usually means proving where your “domicile” really is, i.e., where you intend to live long-term, not just where you vacation.
Planning ahead is critical if you’re thinking about a snowbird lifestyle.
Estate Planning for Minnesotans
First, make sure that you review your will and estate plan after moving.
Next, make sure you understand the Minnesota estate tax rules. For a married couple, Minnesota’s estate tax exemption $3 million per person.
But remember, that figure includes your total net worth, not just cash and investments. A million-dollar home, a life insurance policy, or an inheritance can quickly put you above the limit.
The only way around that is with proper estate planning, often involving trusts. And that’s not something to figure out after someone passes away. By then, it’s too late.
Common Questions About Retiring in Minnesota
How much money do you need to retire in Minnesota?
How much money you need to retire in Minnesota depends on your lifestyle and where you live. The Twin Cities and suburbs tend to be more expensive than rural areas or northern towns. Many retirees maintain their pre-retirement lifestyle, so plan on covering similar expenses plus healthcare. A financial advisor can help you project your income needs based on your goals.
Do seniors pay less property taxes in Minnesota?
Some property tax relief programs exist for seniors, depending on income and home value. These include deferral programs that allow eligible homeowners to postpone part of their property tax payment. Rules vary by county, so check with your local assessor’s office to see what options may apply to you.
Does Minnesota tax Social Security?
Yes, Minnesota does tax Social Security income, but the amount depends on your overall income. Retirees with lower or moderate incomes may qualify for partial exemptions, while higher-income retirees will see more of their benefits taxed. This makes careful income planning especially important if you’re retiring in Minnesota.
Does Minnesota have inheritance taxes?
Minnesota does not have a separate inheritance tax. However, it does have an estate tax that applies to estates valued above $3 million per person, which means heirs can still be affected indirectly through reduced inheritances.
So, Should You Retire in Minnesota?
Most people retire to Minnesota because of the lifestyle or to be closer to family.
The Twin Cities offer everything you’d expect from a major metro area: professional sports teams, theaters, concerts, and a wide range of restaurants and amenities. Beyond the city, Minnesota is known for its outdoor lifestyle, including fishing, hunting, skiing, snowmobiling, and, of course, the cabin life on our 10,000+ lakes.
If you have family who wants to be closer to you or you're looking for a lifestyle upgrade, then Minnesota may be the perfect place for you to retire.
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About the Author
Mitch Zweber
Mitch is a financial professional focusing on portfolio management, retirement planning, estate planning, and goal funding. His approach to financial planning is holistic, addressing each client's needs, goals, and aspirations to build an individualized plan to pursue financial success.
He believes in educating clients to empower them to make confident financial decisions. What excites Mitch most about his job is meeting new clients and contributing to their pursuit of financial success.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Investing involves risk including loss of principal. No strategy assures success or protects against loss.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.
A Roth IRA conversion—sometimes called a backdoor Roth strategy—is a way to contribute to a Roth IRA when income exceeds standard limits. The converted amount is treated as taxable income and may affect your tax bracket. Federal, state, and local taxes may apply. If you’re required to take a minimum distribution in the year of conversion, it must be completed before converting.
To qualify for tax-free withdrawals, you must generally be age 59½ and hold the converted funds in the Roth IRA for at least five years. Each conversion has its own five-year period, and early withdrawals may be subject to a 10% penalty unless an exception applies. Income limits still apply for future direct Roth IRA contributions.
