Retire in Minnesota: Cost, Taxes & FIRE Number for 2026
Minnesota boasts a #6 national healthcare ranking and the world-renowned Mayo Clinic — but its C tax grade and 9.85% top income tax rate are significant trade-offs retirees must weigh carefully.
What It Costs to Retire in Minnesota
The average retiree in Minnesota spends about $57,500 a year ($4,792/month), based on BLS spending data for households 65 and older, adjusted for Minnesota's cost of living. That works out to a standard retirement number of $1,437,500 under the 4% rule, or $1.64M for early retirees using the more conservative 3.5% FIRE withdrawal rate.
Minnesota earns a C retirement tax grade from Plootus Research. The state's 9.85% top marginal income tax rate is among the highest in the nation, and Minnesota partially taxes Social Security benefits — a meaningful concern for retirees at higher income levels. The combination of a high income tax, partial Social Security taxation, and moderate property taxes drives the C grade.
What Minnesota offers in return is exceptional healthcare: the state ranks #6 nationally, anchored by the globally renowned Mayo Clinic in Rochester and strong health systems throughout the Twin Cities. For retirees who value healthcare access above tax savings, Minnesota is one of the best states in the country.
Minnesota Retirement at a Glance
| Annual Retirement Cost | $57,500 ($4,792/mo) |
| Standard Retirement Number (4% rule) | $1,437,500 |
| FIRE Number (3.5% SWR) | $1,642,857 |
| Retirement Tax Grade | C |
| State Income Tax | 9.85% max |
| Social Security Tax | ⚠️ Caution |
| Healthcare Rank | #6 of 50 |
| Avg. Household Income | $71,460 |
| Median Household Income | $58,340 |
| Overall Retirement Rating | ★★☆☆☆ |
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Minnesota vs. Nearby States
| State | Tax Grade | HC Rank | Annual Cost |
|---|---|---|---|
| Minnesota | C | #6 | $57,500 |
| Illinois | C+ | #23 | $57,000 |
| Wisconsin | B- | #16 | $54,000 |
| Michigan | B- | #26 | $52,000 |
Minnesota Retirement Tax Overview
State Income Tax
Minnesota has one of the highest top marginal income tax rates in the country at 9.85%. For retirees with substantial IRA withdrawals, pension income, or investment income, this can create a significant tax liability. The rate applies to income above approximately $166,000 for married filers, but lower brackets (5.35%–7.85%) still apply to more modest retirement incomes.
Social Security Tax
Minnesota partially taxes Social Security benefits — a notable drawback for retirees. Depending on your income level, a portion of Social Security income may be subject to state income tax. The state provides some relief through a Social Security subtraction, but higher-income retirees can still face meaningful Social Security taxes, contributing to the state's C retirement tax grade.
Healthcare in Retirement in Minnesota
Minnesota ranks #6 nationally for healthcare quality — a top-tier result that reflects some of the best medical infrastructure in the world. The Mayo Clinic in Rochester is one of the most recognized medical institutions globally and draws patients from around the world for complex care. The Twin Cities metro area has additional world-class systems including M Health Fairview and Allina Health.
HC Rank #6: Minnesota is among the top states in the nation for retiree healthcare access. The Mayo Clinic alone places Minnesota in a category few states can match for complex care and specialist access. Retirees across most of the state — urban and rural alike — benefit from a well-developed healthcare network with strong health outcomes and high quality of care.
Frequently Asked Questions: Retiring in Minnesota
Minnesota earns a C retirement tax grade driven primarily by its high 9.85% top income tax rate — one of the steepest in the country. However, it ranks #6 nationally for healthcare quality, making it an excellent choice for retirees who prioritize medical access. Average annual retirement spending runs about $57,500, requiring roughly $1,437,500 in savings under the standard 4% rule.
Minnesota partially taxes Social Security benefits, which is a meaningful caution for retirees. Depending on your income level, a portion of your Social Security benefits may be subject to state income tax. Higher-income retirees are most affected, as the exemption phases out above certain thresholds. This is one factor contributing to Minnesota's C tax grade.
Using the standard 4% rule, retiring in Minnesota on its average annual cost of $57,500 requires approximately $1,437,500 in savings. That figure excludes Social Security, which most retirees layer on top to reduce the amount they need from their own portfolio. Minnesota's cost of living is moderate for the Midwest.
At a 3.5% safe withdrawal rate — the more conservative rate recommended for early retirees facing a 40–50+ year horizon — Minnesota's FIRE number is approximately $1.64M, based on its $57,500/year average cost. Early retirees in Minnesota should also budget carefully for healthcare costs before Medicare eligibility at 65, given the state's higher cost profile.
Minnesota ranks #6 nationally for healthcare quality — one of the top positions in the country. The Mayo Clinic in Rochester is consistently ranked as one of the best hospitals in the world, and the Twin Cities metro area has a dense network of high-quality health systems. Retirees in Minnesota benefit from exceptional medical access across most of the state.
Sources
- Plootus Research Team, 2026 State Retirement Cost Analysis
- U.S. Bureau of Economic Analysis — Regional Price Parities
- Minnesota Department of Revenue — Individual Income Tax Guide
- Commonwealth Fund — State Healthcare Rankings 2025
- U.S. Census Bureau — American Community Survey
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