Creating Reliable Retirement Income: A Practical Guide for Retirees and Near‑Retirees in Minnesota

Reliable retirement income doesn’t happen by accident—it comes from understanding your income sources, coordinating them over time, and being thoughtful about taxes and healthcare costs. For retirees and near-retirees in Fridley and the Minneapolis north metro suburbs, planning ahead is especially important because of Minnesota’s state tax structure and rising healthcare expenses. With a clear strategy, you can turn your savings into consistent, predictable income that supports the lifestyle you want.

At Financial LifeLab in Fridley, MN, we help retirees build retirement income plans that fit real life—not just spreadsheets. Whether you’re already retired or getting close, here’s what you need to know about creating dependable income in the years ahead.

Understanding Your Core Income Sources

Most retirement income plans combine several sources, each with its own rules and tax considerations. The key is knowing how they fit together.

Social Security: For many Minnesotans, Social Security is the foundation of retirement income. The age you claim benefits—anywhere from 62 to 70—can significantly change the monthly amount. Delaying benefits increases your payment, which can help hedge against longevity risk. Minnesota does tax Social Security for some households, so it’s important to understand how your overall income affects what you keep.

Pensions: If you’re fortunate enough to have a pension, you may need to choose between a lump sum or monthly payments. Monthly pension income is predictable, but choosing a survivor benefit is an important decision for couples. State taxes apply to pension income as well, which can influence how much you actually pocket each month.

Investments: Your retirement accounts—401(k)s, IRAs, Roth IRAs, brokerage accounts—offer the flexibility to fill in the gaps between Social Security and pensions. Each type of account has different tax treatment, so how and when you withdraw funds matters. For more details on building a financial strategy around these sources, see our page on Retirement Strategies.

Withdrawal Sequencing: The Order Matters

Withdrawal sequencing is simply the plan for which accounts you draw from first. A smart sequence helps stretch your savings, lower taxes, and create steadier income.

A common starting point is using taxable brokerage accounts early on while allowing pre-tax accounts to continue growing. Others may blend withdrawals or use Roth accounts strategically to avoid pushing themselves into higher tax brackets. Required Minimum Distributions (RMDs), which begin at age 73 under current law, also need to be factored into the plan. Because Minnesota taxes certain types of retirement income, choosing the right withdrawal order can help reduce your overall state and federal tax burden.

Coordinating Income With Taxes

Taxes play a bigger role in retirement than many people expect. With multiple income sources, it’s easy to unintentionally trigger higher Medicare premiums, taxes on Social Security, or Minnesota’s state income tax obligations.

Some key tax planning strategies include:

• Managing taxable income to stay within the most favorable tax brackets
• Using Roth conversions strategically in years with lower income
• Coordinating withdrawals to reduce the tax impact on Social Security
• Considering Minnesota-specific deductions and credits that may help offset retirement income taxes

Effective tax coordination often adds years to the life of a retirement portfolio. To learn more about how taxes and retirement income work together, visit our page on Tax Planning.

Don’t Forget Healthcare and Long-Term Costs

Healthcare is one of the biggest expenses for Minnesota retirees. Medicare premiums, supplemental plans, dental care, and potential long-term care costs all need to be built into your income plan.

Near-retirees should also consider how healthcare expenses change before age 65—when you’re not yet eligible for Medicare—and how withdrawing income during those years can affect ACA health insurance subsidies.

Bringing It All Together

A reliable retirement income plan is much more than deciding how much you can spend each year. It’s about coordinating your income sources, minimizing taxes, managing healthcare costs, and adjusting to changes along the way. At Financial LifeLab, we help retirees in Fridley and the Minneapolis north metro suburbs feel confident about their next chapter. If you’d like help building a retirement income plan tailored to your goals, we’re here to guide you every step of the way.