Retirement Planning in the Twin Cities: A 2026 Guide for Minnesotans 55+

Key Takeaways:

• The Twin Cities offer a vibrant mix of culture, dining, and outdoor recreation for retirees.
• Healthcare access is excellent, with top hospitals and the Mayo Clinic nearby.
• Minnesota taxes Social Security and most retirement income, but as of 2026, most retirees can subtract all or part of their Social Security benefit from state taxable income.
• Living costs are moderate for a metro area, though winter utility bills, property taxes, and long-term care are worth planning for.

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Last updated: September 2026

If you're thinking about where to spend your retirement years, the Twin Cities of Minneapolis and Saint Paul offer a combination that's hard to beat. Here, you get big city amenities without losing that friendly Midwestern feel.

From world-class museums, theaters, and music venues to miles of parks, lakes, and trails, there's no shortage of ways to stay active and engaged. Healthcare access is top-notch, with nationally recognized hospitals and specialty clinics right in your backyard. Living costs are moderate for a retiree, healthcare is excellent, and Minnesota has recently made it easier for many retirees to keep more of their Social Security benefits. Taxes and winter costs still call for careful planning, but for most people, the tradeoff is worth it.

This guide is written for Minnesotans age 55 and up who are planning a retirement in the Twin Cities. It covers the key financial milestones, taxes, Social Security, healthcare, and housing, along with the lifestyle side of retirement, since a good plan is about more than the numbers.

Why the Twin Cities Are a Unique Place to Retire

As folks approach their late 50s, they often start weighing the pros and cons of their chosen retirement location. Let's explore how the Twin Cities measures up and what makes it a unique place to retire.

Lifestyle Perks 

One of the best parts about retiring in the Twin Cities is the variety of ways you can enjoy your days. Many neighborhoods, whether it's Saint Paul's charming Summit Hill or Minneapolis's North Loop, are walkable, with coffee shops, markets, and parks just steps from your front door. If you love the arts, you'll have easy access to theaters, galleries, live music, and museums that rival those in much bigger cities.

Foodies will appreciate a dining scene that ranges from James Beard award-winning restaurants to casual spots serving up comfort food. And, of course, there's our famous year-round outdoor recreation, including boating and biking in the summer, crisp fall hikes, cross-country skiing in the winter, and spring walks along the river as the city comes back to life. Whatever your pace, there's always something to look forward to here.

Access to Quality Health Care

Retirees in the Twin Cities can have peace of mind knowing that some of the best healthcare in the country is right at their fingertips. The area is home to renowned systems like the University of Minnesota Medical Center and Abbott Northwestern, and just a short drive away is the world-famous Mayo Clinic in Rochester, consistently ranked among the nation's top hospitals.

Whether you need routine checkups or specialized care, you'll find expert providers and state-of-the-art facilities close to home. For retirees, that means not only convenience, but also the confidence that you'll have access to exceptional care whenever you need it.

Costs of Retiring in the Twin Cities 

When it comes to cost of living, the Twin Cities offer a nice balance, higher than some small towns, but generally more reasonable than many other major metro areas with similar amenities.

Housing costs vary widely by neighborhood, from historic homes in Saint Paul to modern condos in downtown Minneapolis to low-maintenance townhomes in the suburbs. Minnesota still taxes Social Security income above certain thresholds and taxes most retirement distributions, so it's worth factoring that into your long-term planning. Property taxes are relatively moderate, in line with the area's overall cost-of-living ranking.

While Minnesota isn't the cheapest state to live in, its many lifestyle benefits mean you get a lot of value for your dollar. For many retirees, quality of life outweighs the added costs, especially with thoughtful financial planning in place.

Key Financial Considerations for Pre-Retirees in Minnesota

For Minnesotans approaching retirement, especially during the more traditional ages of 55 to 65, thinking through how your income needs and sources will change can be a big mindset shift. You may have worked for 30+ years and likely did a great job automating savings into your work retirement accounts. You're used to budgeting and making spending decisions based on your regular paycheck income. It can be a scary question to consider what happens once your paychecks stop! 

Here are some of the key financial considerations to evaluate as you prepare for the transition: 

• Determining your spending needs. It's helpful to have a reasonable idea of your budget as you approach retirement. Our clients often find their pre-retirement budget isn't much different from their retirement budget, except for travel spending. Reviewing the last six months of outflows from your primary checking account can give you a clearer picture of your regular spending.
• Retirement Income Strategy. Likely, you'll have more than one potential income source to consider in retirement. Social Security typically plays a role, but deciding when to claim can have a big impact on your lifetime benefits. If you have a pension, you'll want to evaluate payout options and how they fit with your other income sources. Investment accounts can help generate regular income for spending needs, but consider the account type and whether the income will be taxed (as with IRAs and pre-tax 401(k)s) or not (as with brokerage accounts and Roth IRAs).
• Inflation and Longevity Considerations. While the overall cost of living here is reasonable compared to other major metros, certain expenses, like utilities, can be higher because of our long, cold winters. Heating bills can add up quickly, and winter weather may also affect your transportation costs if you maintain a second vehicle or arrange for snow removal. Healthcare costs are another factor to watch, as longer lifespans mean more years of potential medical expenses. Inflation can amplify all these costs over time, so it's important to plan for steady increases in everyday expenses while also setting aside enough to cover rising healthcare needs as you age.
• Tax Considerations. As mentioned above, Minnesota is not a low-tax state, and it factors Social Security and pension benefits into your tax liability. When retiring in Minnesota, you must plan for state taxes in addition to federal taxes. 

A good advisor can guide you through Minnesota-specific financial planning and create a map for your key retirement milestones. To read more on this topic, check out our past posts on, click through for past blog posts on how to pay yourself in retirement and determining an appropriate asset allocation for retirement.   

When Should You Claim Social Security in Minnesota?

Most retirees will need to consider when to start claiming their Social Security benefits. This decision gets even more complex when coordinating benefits within a married couple or for divorced individuals. Here are some factors to consider and how living in Minnesota comes into play.

Age to Claim

While you can claim benefits as early as age 62, we typically don't recommend it, as it reduces your benefit for life. We generally recommend waiting until your full retirement age (FRA), and perhaps even delaying until age 70. You receive roughly an 8% increase to your benefit for every year you delay between FRA and age 70. The main drawback to delaying is that if you pass away earlier in retirement, typically before age 80, the increased benefit won't make up for the fewer years of payments.

Coordination for Married Couples or Divorced Spouses

Married couples need to evaluate whether they'll both be eligible for benefits based on their own earnings records, and if so, whether those benefits will be larger than what they'd receive as a spousal benefit. A spousal benefit is 50% of the higher-earning spouse's FRA benefit. It's important to determine what options you and your spouse have to maximize your total benefits. For more, check out our past post on claiming strategies for married couples.

Divorced spouses may be entitled to the greater of their own benefit or a spousal benefit based on their ex-spouse's work record. To qualify, you must have been married for 10 consecutive years or longer, both you and your ex must be at least 62, and you must not be remarried.

Minnesota Specific Considerations

Minnesota does factor Social Security benefits into its tax calculation, though most residents now avoid paying tax on their benefits altogether. 

Under current law, you can subtract 100% of your taxable Social Security benefit from your Minnesota taxable income, with that subtraction phasing out gradually above certain income levels. For 2025, those phase-out thresholds were $108,320 for married joint filers and $84,490 for single and head of household filers, and they're adjusted upward for inflation each year.1 

A smaller, alternate subtraction is also available and is used automatically when it produces a larger benefit. Several bills introduced in the 2025 to 2026 legislative session would go further and eliminate the state tax on Social Security, so it's worth watching. To learn more, check out our post on how Social Security benefits are taxed for Minnesota residents.

Longevity and cost of living are also worth weighing. Those with a longer life expectancy typically benefit from delaying Social Security until age 70, since the higher monthly benefit can help cover more of your monthly budget, even with the Twin Cities area's moderate cost of living.

Housing and Downsizing Decisions in the Twin Cities

As you approach or enter retirement in the Twin Cities, housing decisions can play a big role in both your lifestyle and your finances. Many retirees choose to age in place, enjoying the comfort and familiarity of their current home, though this can mean budgeting for maintenance, accessibility updates, and Minnesota's winter upkeep. Others downsize to a smaller home or condo, freeing up equity and reducing upkeep, or move into a 55+ community for built-in social opportunities and amenities.

Popular retiree-friendly areas in the Twin Cities offer a variety of lifestyle options, each with its own appeal:

• Edina – Known for its walkability, excellent shopping, and high-quality services.
• Bloomington – Home to beautiful parks, strong community programs for seniors, and proximity to the MSP airport for easy travel.
• Woodbury – Offers newer housing developments, extensive parks and trails, and easy freeway access.
• Roseville – Centrally located between Minneapolis and Saint Paul, providing quick access to both downtowns.
• Mendota Heights – Offers a quiet, small-town feel with upscale neighborhoods and easy access to both cities

For those seeking more support, the metro area also has a wide range of assisted living and continuing care communities, allowing you to transition smoothly as your needs change. The best choice depends on your priorities, whether that's independence, convenience, community, or care.

If you do decide to remain a homeowner during your retirement transition, know that Minnesota's homestead market value exclusion can lower your property taxes by reducing the taxable market value of your home.²

For assessment years 2026 and 2027, the exclusion applies to homes valued up to $585,000, a temporary increase from the standard $517,200 threshold, with a maximum exclusion of $42,980 for homes valued at $107,450 or less.3. The exclusion phases down as home value rises. Check with your county assessor or the Minnesota Department of Revenue for the figures that apply to your specific tax year.

Healthcare and Long-Term Care Planning

Understanding your healthcare coverage options in retirement is important to building a solid financial plan. Your options will depend on both your age and available resources.

Healthcare Pre-Age 65

Medicare eligibility doesn't begin until you turn 65. If you retire before 65, you'll need to consider which path provides the most cost-efficient coverage. Those options can include continuing employer coverage through COBRA, specific retiree health coverage through your employer, purchasing a plan on the health insurance marketplace, or joining a spouse's employer plan if available.

Several of these options come with a higher price tag, and this can be a great time to make use of funds you've saved into a Health Savings Account (HSA) during your working years. The growth and distribution of these funds are tax-free if used for qualified medical expenses.

Healthcare at Age 65+

At age 65, you become eligible to apply for Medicare. Medicare provides basic hospital and doctor-visit coverage, but gaps remain that a Medicare Supplement, or Medigap, plan can fill. These private plans fill in the gaps not covered by Medicare and help you control your out-of-pocket healthcare expenses. In Minnesota, carriers offer standardized Medigap plan options (check them out here). Medicare Advantage is a private option offered by insurers. Although Medicare Advantage plans typically have cheaper premiums than original Medicare with a Medigap policy, their out-of-pocket expenses can be higher, and you may have a hard time switching back to original Medicare down the road. For more information, check out our post on Medicare details.

For 2026, the standard Medicare Part B monthly premium is $202.90, up from $185.00 in 2025, with an annual Part B deductible of $283.⁴ Higher income retirees pay more under Medicare's income-related surcharge, known as IRMAA, which is one more reason Roth conversion and withdrawal timing decisions are worth planning well before age 65.

Long-Term Care

Unfortunately, Medicare has very limited coverage for long-term care expenses. You can consider pursuing long-term care insurance, but the premiums are often costly and can increase over time. Many people plan to self-insure by aiming to have enough assets to fund care as needed. The Twin Cities offer a wide range of long-term care options to meet varying needs, from in-home care and adult day programs to assisted living, memory care, and skilled nursing facilities.

Many communities, such as continuing care retirement communities (CCRCs), allow residents to transition seamlessly as their care needs change over time. Costs can vary significantly depending on the level of care. 

According to the 2024 CareScout (Genworth) Cost of Care Survey, the median annual cost of an assisted living community in Minnesota was $69,900, or roughly $5,825 a month, up 9% from the year before and close to the national median of $70,800.5  Minnesota ranks closer to the middle of the pack nationally for assisted living costs. However, home health aide and homemaker services in the state run notably higher than the national average. Memory care and skilled nursing generally cost more still.

The metro area has numerous highly rated providers, including facilities affiliated with major health systems, ensuring access to specialized services for conditions like dementia, Parkinson's, and post-surgical rehabilitation.

Planning for these potential costs, whether through savings, insurance, or a combination, can help ensure you have both the care and the peace of mind you need later in life.

How to Make the Most of Your Retirement Accounts

Making the most of your retirement accounts is about more than just drawing income. It's about using smart strategies to maximize what you keep and how your money supports your goals. Key considerations include:

Distribution planning

If you have money in pre-tax 401(k)s or traditional IRAs, you'll eventually have to take some out once you reach a certain age. This is known as a Required Minimum Distribution, or RMD, and currently begins at age 73, rising to 75 for those born in 1960 or later. Consider how large these distributions will be and how they'll affect your taxes, since they're fully taxable.

You may find your RMDs are more than you need, given your spending and other income sources. This is when considering strategies such as Roth conversions early in retirement can help reduce your later tax bill. Check out our past post on what to do if you don't need your whole RMD.

One way to help manage your taxes in retirement is to consider the sequence of withdrawals from your various retirement accounts. You can strategically decide whether to draw first from tax-deferred, Roth, or taxable accounts to balance taxes and preserve flexibility.

Gifting and legacy goals

Another way to reduce taxes while meeting your goals is to use charitable giving tools like a Donor Advised Fund (DAF) or make Qualified Charitable Distributions (QCDs) from IRAs. Both strategies allow you to lose less money to taxes while supporting your philanthropic goals. Check out our past post on taxes and charitable giving for more on those strategies.

Minnesota-specific tax planning

You'll need to factor in state income taxes when deciding how and when to take withdrawals, especially if you have multiple account types.

Thoughtful planning can help you turn your retirement accounts into a steady, tax-efficient source of income while supporting your long-term vision.

Lifestyle and Purpose in Retirement

So far, we've covered many of the financial and lifestyle considerations when planning for retirement in Minnesota. But retirement planning is more than finances and lifestyle. It's also about finding a new or renewed sense of purpose. 

Many retirees discover meaning through volunteering with local nonprofits, pursuing "second act" careers that align with personal passions, or enrolling in adult education programs at area universities and community centers. For more on this side of retirement, check out our post on Dr. Riley's four phases of retirement.

The Twin Cities make it easy to stay active with year-round arts, culture, and recreation, while also offering seasonal hobbies like gardening, boating, or cross-country skiing. And for those who prefer to escape part of Minnesota's long winter, budgeting for a sunny getaway, whether it's a few weeks in Arizona or a month in Florida, can add balance and variety to your retirement lifestyle. By planning, you can create a retirement that blends purpose, community, and adventure all year long.

Retirement Planning in Minnesota FAQs

1. How are Social Security and pensions taxed in Minnesota?

Minnesota factors Social Security benefits into your tax liability. Still, under current law, you can subtract 100% of your taxable Social Security benefit from Minnesota taxable income up to certain income thresholds. For 2025, those thresholds were $108,320 for married joint filers and $84,490 for single filers, and they rise with inflation each year.¹ This makes careful tax and distribution planning more important than ever.

Minnesota taxes most types of pension income, other than a few exceptions, such as military retirement pay.

2. What are the best Minnesota neighborhoods for retirees on a fixed income?

Determining which neighborhoods or suburbs will be best for you depends on your priorities. Here are some options that come recommended due to their affordability:

• Apple Valley – Plenty of amenities and natural beauty, and just south of Minneapolis.  
• St. Louis Park – Just west of downtown Minneapolis, with a blend of city conveniences and suburban charm.  
• Roseville – One of the few suburbs adjacent to both Minneapolis and St. Paul, with beautiful parks. 
• Bloomington – Proximity to both Twin Cities and the airport, along with nearby parks and nature.  

3. Are there retirement communities near Minneapolis or St. Paul?

Yes. There are many options within each of the Twin Cities and the surrounding suburbs. A few examples located right within Minneapolis and St. Paul.  

• Lexington Landing - Run by Presbyterian Homes and featuring a full continuum of care right in the West 7th neighborhood of St. Paul. 
• Waters of Highland Park - A full range of care services located in a very walkable area of Highland Park in St. Paul, right next to the Mississippi River. 
• Becketwood Cooperative - A retirement community for those 55+ in Minneapolis, right on the Mississippi River. The cooperative partners with Episcopal Homes of Minnesota when residents need assisted living or long-term care services. 

4. What is the average cost of living for retirees in the Twin Cities? 

This number can vary widely depending on location and housing choices. Still, a reasonable average for living expenses is roughly $50,000 to $60,000 a year, not including long-term care, which can add considerably more depending on the level of care needed.

5. What steps should I take to retire comfortably in Minnesota?

Start by determining your retirement spending needs, then build an income plan that reliably covers them. The financial considerations sections above walk through the key pieces: budgeting, income sequencing, Social Security timing, and tax planning.

6. Do I need to establish legal residence in a different state to lower taxes?

Some states are more tax-friendly to retirees than Minnesota, which leads some people who spend part of the year elsewhere to consider establishing residency there. Be aware that establishing residency in another state is easier said than done. You must meet the 183-day rule and maintain good records. Check out this Minnesota state page for more details: Income Tax Fact Sheet 1: Residency.

7. Is long-term care more affordable in the Twin Cities than in other parts of the country?

Minnesota isn't the cheapest state for long-term care, but it typically falls in the middle of the range. According to the 2024 CareScout (Genworth) Cost of Care Survey, the median monthly cost for assisted living in Minnesota was about $5,825, just below the national median of roughly $5,900.5 Home health aide and homemaker service costs in Minnesota, however, run well above the national average.

We Help with Retirement Planning in the Twin Cities

Retiring in the Twin Cities offers a unique mix of opportunities and considerations: from vibrant neighborhoods and world-class healthcare to the nuances of Minnesota’s tax landscape and housing options. With so many moving parts, having a clear, well-thought-out plan can make all the difference. Professional guidance can help you optimize your tax strategy, coordinate your income sources, and make confident housing and lifestyle choices that align with your goals. The key is to take proactive steps now, before you retire, so you can avoid rushed decisions later and fully enjoy the next chapter of your life in this exceptional metro area. If you are interested in a retirement partner to support you through this planning, schedule a complimentary phone call with Clerestory Advisors today!  

Sources: 

1. Minnesota House Research Department, Unlimited Social Security Subtraction: Analysis of H.F. 100, 2025
2. Minnesota Department of Revenue, Homestead Market Value Exclusion
3. Minnesota Legislature, Office of the Revisor of Statutes, S.F. 416, homestead market value exclusion amounts for assessment years 2026-2027
4. Centers for Medicare & Medicaid Services, 2026 Medicare Parts A & B Premiums and Deductibles
5. CareScout (Genworth), 2024 Cost of Care Survey, Minnesota data, released 2025
6. Minnesota Department of Revenue, Income Tax Fact Sheet 1: Residency

This article is for general educational purposes and does not constitute tax, legal, or investment advice. Minnesota tax thresholds and Medicare figures are updated annually. Confirm current-year numbers with the Minnesota Department of Revenue, Medicare.gov, or your financial advisor before making decisions.