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.
Living costs are moderate for a metro area, though careful tax and financial planning are important.

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. And while the cost of living is higher than in some smaller towns, it’s still more affordable than many major metro areas, especially when you factor in quality of life.

In short, the Twin Cities give you a vibrant, connected community that makes retirement in Minnesota both comfortable and exciting. In this guide, we will explore various retirement planning milestones and how to approach them with confidence!

The information provided will be most relevant for those who are age 55+ and are looking to retire in the Twin Cities area of Minnesota. This guide will cover some key financial considerations as well as lifestyle factors since retirement planning means more than just the numbers.

Why the Twin Cities Are a Unique Place to Retire

As folks approach their late 50’s, they often start to weigh the various pros and cons of their chosen location for retirement. Let’s explore how the Twin Cities measures up in this cost-benefit analysis 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, Abbott Northwestern and just a short drive away is the world-famous Mayo Clinic in Rochester, consistently ranked among the top hospitals in the nation.

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 can vary widely depending on the neighborhood, from historic homes in Saint Paul to modern condos in downtown Minneapolis to low-maintenance townhomes in the suburbs. Minnesota does tax Social Security income (although you may be able to completely subtract this income if you are under certain thresholds) and retirement distributions, so it’s worth factoring that into your long-term planning. Property taxes are relatively moderate, like the area’s overall ranking for cost of living.

While Minnesota is not the cheapest state to live in, its many positive lifestyle factors mean you’re getting a lot of value for your dollar. For many retirees, the quality of life more than 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 55-65, considering how your income needs and sources will change can be a big mindset shift. You may have been working for 30+ years and have likely done a great job of 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 is helpful to have a reasonable idea of your budget as you approach retirement. Our clients often find their pre-retirement budget isn’t all that different from their retirement budget, other than travel spending. Reviewing the last 6 months of outflows from your primary checking account can help give you a clearer picture of your regular spending.
Retirement Income Strategy – Likely, you will 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 to generate regular income for spending needs, but it’s important to consider the type of account and whether the income will be taxed (i.e. IRAs and pre-tax 401(k)s) or not (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 due to our long and cold winters. Heating bills can add up quickly, and winter weather may also influence your transportation costs if you choose to 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, and Minnesota’s excellent healthcare system can come with a price tag. 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. Minnesota does consider Social Security and pension benefits when determining your tax liability. When retiring in Minnesota, you must factor in state taxes along with federal taxes in your planning.

A good advisor can help guide you through the financial planning relevant to Minnesota residents and create a map for your key retirement planning milestones. To read more on this topic, 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 considering how to coordinate two benefits within a married couple or for those who have divorced. Here are some factors to consider and how living in Minnesota may have an impact:

Age to Claim – While you are allowed to claim your benefits as early as age 62, we typically don’t recommend doing so, as this will result in a reduced benefit for life. We generally recommend at least waiting until your full retirement age (FRA) and perhaps even considering delaying until age 70. Currently, you receive an 8% increase on your benefit for every year you delay between FRA and age 70. The main drawback of delaying your benefits claim is that if you end up dying earlier on in retirement (typically before age 80). In this case, the increased benefit for delaying would not make up for less years of benefit payments.
Coordination for Married Couples or Divorced Spouses
- Married couples need to evaluate if they will both be eligible for benefits based on their earnings records, and if so, will both of their own benefits be larger than they would receive as a spousal benefit. A spousal benefit would be 50% of the spouse’s FRA benefit. It is important to determine what options are available to you and your spouse in order to maximize total benefits. For more details on this topic, check out our past blog 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 do 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
- As noted previously, Minnesota does consider Social Security benefits in their tax calculation. However, some residents will not pay any tax on their benefits. To learn more about how this might impact you, check out our blog post on changes to the taxation of Social Security benefits for Minnesota residents.
- Some other key considerations are longevity and cost-of-living in the state. Those with increased longevity would typically benefit from delaying their Social Security benefits until age 70. This results in a higher monthly benefit from life. This increased benefit can also help cover a larger amount 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 opt to 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, one thing to be aware of is that in Minnesota, you can qualify for a homestead market value exclusion on your property taxes. The exclusion reduces the taxable market value for property classified as a homestead. This, in turn, decreases your property taxes. If your homestead value is anything less than $517,200, you will receive some benefit from this exclusion.

Healthcare and Long-Term Care Planning

Understanding your options for healthcare coverage in retirement is important to creating 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. For those retiring prior to 65, you will need to consider what path will provide you with 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 have 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 will become eligible to apply for Medicare. Medicare provides basic levels of both hospital and doctor visit coverage; however, there are gaps in the coverage that should be addressed with a Medicare supplemental or Medigap plan. These private plans fill in the gaps not covered by Medicare and help you control your out-of-pocket healthcare expenses. In Minnesota, there are standardized Medigap plan options that carriers provide (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 later down the road. For more information, check out our blog post on the details of Medicare.
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 folks end up planning to be self-insured by aiming to have enough assets available at the end of their life 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, ranging from several thousand dollars per month for assisted living to much higher amounts for specialized memory care or 24/7 skilled nursing.

The metro area is home to 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 ahead 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 any money in pre-tax 401(k)s or traditional IRAs, you will eventually have to take some out when you reach a certain age. This is known as a Required Minimum Distribution. It is important to consider how large these distributions will be and how they will add to your taxes, given that they are fully taxable.
- You may discover that these RMDs will be more than you need, given your spending and other income sources. This is when considering strategies such as Roth conversions early in retirement can be helpful in reducing your later tax bill. Check out our past blog post for 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 help reduce taxes while also meeting your goals is to take advantage of charitable giving tools like a Donor-Advised Fund (DAF) or making 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 blog post on taxes and charitable giving for more details on those strategies.
Minnesota-specific tax planning – You will 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 have covered many of the financial and lifestyle considerations when planning for retirement in Minnesota. However, retirement planning is more than the financial and lifestyle; it can also be about finding a new or renewed purpose. Finding purpose in retirement often means exploring new ways to stay engaged, connected, and fulfilled beyond your career. 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 aspect of retirement, check out our blog 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 ahead, 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 does consider Social Security benefits when determining your tax liability. However, due to 2023 tax legislation changes, those taxpayers making less than $100k married filing jointly ($78k single filers) are now allowed to completely subtract out their Social Security income. This makes careful tax and distribution planning more important than ever.
Minnesota taxes most types of pension income other than for a few cases, 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 surrounding suburbs. Here are some examples of those 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?

While this number can vary quite a bit depending on location and housing choices, a reasonable average for living expenses seems to be $50k/year.

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

It is important to determine your spending needs in retirement and make an income plan that will cover those needs. Check out the prior sections in this guide related to financial considerations for more information.

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

There are many states that are more tax-friendly to retirees than Minnesota. This leads some people who may spend part of the year in another state to look at establishing residency there. However, 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: https://www.revenue.state.mn.us/income-tax-fact-sheet-1-residency

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

While Minnesota is not the cheapest state, it typically falls in the middle of the range for long-term care costs. A 2025 study by A Place for Mom found that the median monthly cost for assisted living in Minnesota was $5,559, while the range spanned from $4,000-$8,000 a month across the country.

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:

https://www.fidelity.com/viewpoints/retirement/social-security-for-divorced-spouses https://www.revenue.state.mn.us/homestead
https://mn.gov/senior-linkage-line/medicare/
https://www.house.mn.gov/hrd/issinfo/sstaxes.aspx#:~:text=Taxes%20the%20same%20amount%20of,federally%20taxable%20Social%20Security%20benefits.
https://www.house.mn.gov/hrd/issinfo/penexcl.aspx?src=20
https://www.revenue.state.mn.us/income-tax-fact-sheet-1-residency
https://www.krislindahl.com/blog/most-affordable-minneapolis-suburbs/
https://mn.gov/deed/data/data-tools/col/
https://www.fox9.com/news/how-far-will-1-million-go-retirement-minnesota
https://www.elderlifefinancial.com/cost-of-care/cost-of-senior-care-minnesota/
https://www.aplaceformom.com/caregiver-resources/articles/cost-of-assisted-living

Liz Alf is the Principal of Clerestory Advisors and fee-only CERTIFIED FINANCIAL PLANNERTM located in Minneapolis, MN. She is a member of the National Association of Personal Financial Advisors (NAPFA), the Fee Only Network and Wealthtender. She enjoys serving clients with on-going financial planning and investment management services.