Retirement planning can feel a lot like preparing for a cross-country road trip.
You’ve got the car (your savings), a destination in mind (the lifestyle you want), and maybe even a few stops you’ve dreamed about along the way. But without a map, it’s easy to second-guess the route — or wonder if you’ve packed enough.
For Minnesota families nearing retirement, those questions usually sound like: “Do we have enough saved?” “When should we take Social Security?” “What about healthcare or long-term care costs?” These are the first steps every retiree needs to take: charting out income streams, expenses, and goals so the trip goes smoothly.
And like any great road trip, the earlier you plan, the more freedom you’ll have once the adventure begins.
1. Define Your Destination: What Are Your Financial Goals?
What kind of life do you want to live once you “start the car” and retire?
For some Minnesota families, that means spending more time at the cabin, traveling across the country, or simply having the peace of mind to cover everyday expenses without worry. Others may want to help children or grandchildren with education costs, support charitable causes, or leave a lasting legacy through thoughtful estate planning.
Make a list of goals and timelines. Don’t be afraid to actually enjoy this part of the process. Of course, your list can change, but once you have an idea of the “what,” we can proceed to the “hows”:
- How much you need in retirement savings
- How much you’ll withdraw annually and which accounts you’ll draw from first
- How you’ll structure income streams like Social Security benefits, IRAs, or pension plans
Every decision that follows — investment management, healthcare planning, even tax strategies — becomes more focused and intentional.
2. Take Stock of Your Retirement Accounts and Income Sources
The next step is checking your fuel gauge. In retirement planning terms, that means understanding what income streams you’ll have available and how reliable they are.
Start with the obvious: your retirement accounts. Most Minnesota families have a mix of employer-sponsored plans like 401(k)s or pension plans, plus IRAs or Roth IRAs built up over the years. Knowing the balances, contribution limits, and withdrawal rules for each is key to understanding how long your savings could last.
Then there’s Social Security. When to claim benefits can be one of the most impactful decisions you make, especially if you or your spouse are weighing different timelines. Claiming early can give you income sooner, but delaying can substantially increase your monthly benefit for life.
If you’re a business owner, don’t overlook the value tied up in your company. Whether it’s through succession planning, selling the business, or setting up retirement income through profit distributions, your business can be a cornerstone of your financial strategy.
All of these pieces — retirement accounts, Social Security benefits, pensions, even non-traditional income streams — come together to form your financial “fuel tank.” The more clearly you understand what’s available, the better you can plan for how and when to use each source.
Consider working with a financial professional to optimize and coordinate your investment strategy.
3. Plan for Healthcare and Long-Term Care Costs
As much as we’d like to avoid them, surprise detours can disrupt a well-planned road trip — and in retirement, healthcare is often the biggest one. Even if you’ve been healthy your whole life, medical expenses can add up quickly and become a financial burden, particularly once you leave the workforce.
Medicare provides a strong foundation, but it doesn’t cover everything. You’ll still need to account for premiums, deductibles, prescription drugs, and potential gaps in coverage. Supplemental insurance can help, but it’s another line item to budget for. The numbers can be sobering: A 65-year-old today will need around $165,000 in savings just to cover health care expenses in retirement.
Health care is expensive, but long-term care is in a category of its own. In Minnesota, the average cost of a semi-private room in a nursing home is over $130,000 per year.
And we understand — it’s natural to think, “I’m in great shape, that won’t be me.” No one wants to envision themselves needing day-to-day help. That said, someone turning 65 today has nearly a 70% chance of needing long-term care in their lifetime, and about one in five will need it for at least five years.
This is where strategies like long-term care insurance, hybrid life insurance policies, Health Savings Accounts (HSAs), or simply setting aside dedicated assets can come into play. The goal isn’t to predict every future medical bill, but to make sure your retirement plan can absorb the unexpected without derailing your financial security.
Think of healthcare planning as packing an emergency kit for the trip: you hope you won’t need it, but you’ll be glad it’s there if you do.
4. Build a Tax-Smart Retirement Income Strategy
Every mile on your retirement road trip has a cost — but how much tax you pay on those miles depends on the route you choose. For many retirees, the difference between a good plan and a great one comes down to taxes.
That’s because not all retirement accounts are taxed the same way. Traditional IRAs and 401(k)s are tax-deferred, which means withdrawals are taxed as ordinary income. Roth IRAs, on the other hand, allow for tax-free withdrawals. Brokerage accounts may be subject to capital gains taxes, and pensions or annuities each come with their own rules.
The order in which you tap these accounts, often called withdrawal sequencing, impacts the longevity of your retirement savings.
As you build a tax-smart retirement income plan, there are several strategies to keep in mind:
Coordinating withdrawals across accounts: Rather than defaulting to your IRA or 401(k), blending withdrawals from taxable, tax-deferred, and tax-free accounts can help manage your tax bracket more effectively each year.
Roth conversions: Converting a portion of traditional IRA or 401(k) funds to Roth accounts during lower-income years can reduce required minimum distributions (RMDs) later, providing more tax-free income down the road.
Timing Social Security benefits: The decision of when to start Social Security ties directly into your tax picture. Delaying until 70 could increase your total lifetime benefits by over $100,000, especially for married couples who coordinate spousal benefits. That said, delaying and boosting future income impacts the taxation of withdrawals from other retirement accounts — which is why it’s imperative to coordinate your strategy.
Factoring in state tax laws: Minnesota is one of only nine states that taxes some portion of Social Security income. For 2025, joint filers with provisional income above $108,320 may see up to 85% of their benefits taxed at the state level.
A deliberate tax strategy unlocks fiscal flexibility. When markets are volatile, you’ll have more choices about which accounts to draw from. When healthcare costs pop up, you’ll have resources set aside in the most efficient way. And when it’s time to pass wealth on, your heirs can benefit from your efforts.
In short, every dollar saved in taxes is a dollar that can be spent on the journey itself.
5. Address Estate Planning Early
No one likes to think about the end of the journey, but skipping estate planning can leave your family without a map when they need it most. Unfortunately, there’s a common misconception that estate planning is for the ultra-wealthy — frankly, that’s just not the case.
An estate plan not only protects your assets and clarifies your wishes but also prevents your loved ones from being burdened with unnecessary stress or legal battles.
At its core, estate planning starts with the basics:
- A will to outline how you want assets distributed.
- Powers of attorney and healthcare directives so trusted individuals can act on your behalf if you’re unable.
- Updated beneficiary designations on retirement accounts, life insurance, and annuities — which override instructions in your will.
From there, tools like revocable living trusts can help avoid probate, ensuring assets transfer more smoothly and privately. For those with significant wealth, advanced strategies such as charitable trusts or gifting strategies may help reduce estate taxes while supporting causes you care about.
Estate planning is as much emotional as financial. Without it, your family could be left guessing about your wishes — and disagreements typically follow. Addressing estate planning now helps avoid rushing these decisions later.
Think of it as programming your GPS before the trip begins: it sets the course so your loved ones know exactly where to go.
Minnesota Estate Planning Rules to Know
Minnesota is one of only a handful of states that have estate taxes, which should factor into your financial planning. At a high level, here’s what you need to know:
- Minnesota estate tax applies to estates exceeding $3 million (as of 2025). That’s much lower than the federal exemption of nearly $14 million, meaning many Minnesota families who wouldn’t owe federal estate tax may still face a state-level bill.
- Minnesota’s estate tax is progressive, with rates ranging from 13% to 16% depending on the size of the estate.
- The Minnesota gift tax was repealed in 2014. That said, gifts made after June 30, 2013 are added back into the estate for calculating estate tax if made within three years of death.
Let’s walk through an example of a Minneapolis-based individual with a $10.1 million estate. Their taxable estate would be $7.1 million ($10.1 million less the $3 million exemption). This amount is subject to the lowest marginal rate (13%) on the progressive scale, making your estate tax liability $923,000 (13% x $7.1 million).
6. Work With the Right Financial Advisor
Even the best road trip can hit bumps if you’re trying to drive without a map. Retirement is no different. You can piece together advice from friends, articles, FAQs, webinars, or calculators, but at some point most families reach the same crossroads: “Am I really on the right path?”
A good financial advisor helps you see the big picture. They’ll test your plan against different scenarios, like a market downturn, higher healthcare costs, or living longer than expected. They’ll also watch for pitfalls that are easy to overlook on your own, like tax traps, outdated beneficiary designations, or required minimum distributions that can push you into a higher tax bracket.
Importantly, the right advisor should make wealth management clearer, not more confusing. Look for someone who:
- Acts as a fiduciary, legally obligated to put your best interests first.
- Can explain complex strategies (e.g., Roth conversions, trusts, withdrawal sequencing) in plain English.
- Takes time to understand your goals, family dynamics, and values before recommending solutions.
Working with an advisor can and should unlock peace of mind. You’re still driving, just with a co-pilot who knows the terrain, performs regular maintenance, and guides you confidently toward your destination.
Preparing for the Next Chapter
As you inch closer to retirement, it’s natural for questions to surface:
Have I made the right financial decisions?
Will my savings last?
Am I ready for this much free time?
These are signs of thoughtful preparation. Retirement is likely the wealthiest you’ve ever been in terms of time, talent, and treasure. Thinking intentionally now about how to use those assets is what turns uncertainty into confidence.
Let’s talk through your goals together. Reach out to the Pine Grove team to start the conversation.
