Retirement Strategy Guide

How Long Will $750,000 Last in Retirement at Age 62? A Minnesota Guide

A $750,000 retirement portfolio can last approximately 25 to 30 years under a conservative 4% annual withdrawal rate; however, for an early retiree in Minnesota, factors like health insurance premiums before Medicare and state income taxes can accelerate portfolio depletion, reducing its longevity to 12 to 15 years if not managed within a comprehensive strategy.

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The Three-Year Bridge

Health Insurance and Social Security

Retiring at age 62 is an attractive goal for many executives and professionals in the Twin Cities metro area. However, choosing to retire before the standard milestone of age 65 introduces a critical three-year planning gap. This period requires careful cash flow management to prevent early depletion of your $750,000 portfolio.

For professionals exiting corporate positions at major Minnesota firms like Target, Medtronic, or Ecolab, the transition from employer-sponsored benefits to self-funded retirement requires a clear bridge strategy. During these three years, you must address two major cash flow variables.

For more details on state-specific considerations, view our comprehensive Minnesota retirement planning guide.

Key 62-to-65 Planning Gaps

The Healthcare Coverage Gap

Medicare eligibility does not begin until age 65 according to the U.S. Department of Health and Human Services (Medicare.gov). If you retire at 62, you must fund your own health coverage via COBRA, private market health plans, or structured HSA distributions, which can require substantial monthly out-of-pocket costs.

The Social Security Reduction

Claiming Social Security at age 62 results in a permanent benefit reduction of up to 30% compared to your Full Retirement Age. While delaying claims to age 67 or 70 increases your monthly benefit, it requires withdrawing a larger share from your $750,000 portfolio to fund your lifestyle during the gap years, increasing your initial withdrawal rate.

The Cost of Early Withdrawal

Portfolio Longevity Based on Annual Withdrawal Rates

To understand how long $750,000 may last at age 62, it is useful to look at various withdrawal rates. These illustrative scenarios are educational; actual results vary based on market conditions, asset allocation, and annual inflation.

Annual Withdrawal Rate	Initial Annual Income	Illustrative Longevity Range	Key Planning Considerations
3% Withdrawal Rate	$22,500	30+ Years	Highly conservative; provides strong buffer against inflation and market volatility, but may require other income sources to meet expenses.
4% Withdrawal Rate	$30,000	25 to 30 Years	The traditional rule of thumb; designed to sustain portfolio through typical historical market cycles, assuming a balanced allocation.
5% Withdrawal Rate	$37,500	18 to 22 Years	Moderate risk of early depletion; requires steady market conditions and careful monitoring to avoid running out of funds.
6% Withdrawal Rate	$45,000	12 to 15 Years	High risk of premature depletion; often requires a strategy that includes reduction of discretionary spending during down markets.

Note: These illustrations represent initial withdrawal values adjusted for inflation over time. They are not projections of future performance and do not represent specific investment products.

State Tax Planning

The Minnesota Tax Drag on Retirement Income

When calculating how long $750,000 will last, many retirees make the mistake of focusing solely on federal taxes. In Minnesota, the state tax environment can have a substantial impact on your net spendable income.

Minnesota taxes traditional IRA and 401(k) distributions as ordinary income. For 2026, Minnesota state income tax rates range from 5.35% to 9.85%, according to the Minnesota Department of Revenue (MN Department of Revenue). If your entire $750,000 portfolio consists of pre-tax retirement accounts, a portion of every withdrawal will go directly to state and federal taxes, meaning you must withdraw more to cover your actual living costs.

To manage this burden, we help clients design tax-aware distribution strategies. Learn more about how the state handles these rules in our guide to Minnesota state taxes on retirement income.

Minnesota Retirement Tax Facts (2026 Rules)

1
Ordinary Income Treatment: Traditional 401(k) and IRA withdrawals are fully taxable at ordinary state income tax rates of up to 9.85%.
2
Social Security State Taxation: Minnesota taxes Social Security benefits for higher earners, with subtractions phasing out above adjusted gross incomes of approximately $105,000 for single filers and $130,000 for married couples filing jointly in 2026.
3
No Capital Gains Exclusions: Minnesota taxes capital gains at ordinary income rates. There are no preferential long-term capital gains rates at the state level as of 2026.

Mitigating the Risks

Strategic Withdrawal Ordering to Prevent Premature Depletion

How you sequence your distributions from taxable, tax-deferred, and tax-free accounts can significantly affect your portfolio's survival rate. An unstructured approach can result in excessive taxes or premature asset depletion.

Tax-Bracket Management

Withdrawing up to the top of lower tax brackets while utilizing a combination of traditional and Roth assets can minimize your overall effective tax rate, helping preserve more of your core $750,000 principal.

The Roth Conversion Opportunity

The window between age 62 and age 73, when Required Minimum Distributions begin as of 2026, represents a critical planning window. Converting pre-tax traditional IRA or 401(k) assets to a Roth IRA during lower-income years may help lower your long-term tax burden. For more on this, read about our Roth conversion strategies for Minnesota retirees.

Sequence of Returns Guardrails

Withdrawing heavily from equity-based assets during a market downturn can permanently damage your portfolio's longevity. Implementing dynamic spending guardrails or holding a cash reserve can protect your portfolio during market corrections.

Twin Cities Focus

Retirement Transition Planning for Corporate Professionals

At New Horizons Boutique Financial Services, we work with executives and professionals nearing retirement in Lake Elmo, Stillwater, Woodbury, and across the Twin Cities metro. We understand that early retirement at age 62 requires a strategy-first approach rather than a standard checklist.

Our team holds professional credentials including Lars Engman, MBA, and Alec Engman, B.S. Economics (University of Minnesota), and brings deep local expertise to every engagement. We design customized plans that coordinate all aspects of your retirement transition.

Tailored Services for Early Retirees

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Corporate Benefits Integration: Coordinating pension distributions, deferred compensation, and equity plans from major employers like Medtronic, Ecolab, or HealthPartners (explore our specialized planning resources for Medtronic, Ecolab, or HealthPartners).
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Medicare-Bridge Planning: Designing tax-efficient cash flow to fund health insurance costs between ages 62 and 65 without triggering high-bracket tax liabilities.
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IRMAA Surcharge Mitigation: Managing taxable income levels to avoid Medicare Part B and Part D premium surcharges when you reach age 65 (where 2026 standard Part B premiums start at $202.90 per month but can rise up to $689.90 depending on income).
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Minnesota Estate Planning Coordination: Aligning retirement withdrawals with Minnesota's unique $3 million estate tax exemption threshold to protect your legacy.

Common Questions

Frequently Asked Questions

Can I retire at age 62 with $750,000?

Yes, retiring at age 62 with $750,000 is possible, but it requires highly disciplined spending, a solid plan for health insurance before Medicare, and a clear understanding of your tax liability. Under a standard 4% withdrawal rate, the portfolio provides approximately $30,000 in initial annual pre-tax income, which typically must be supplemented by other sources like part-time work, consulting, or a future pension to support a typical Twin Cities lifestyle.

What is the average cost of healthcare for early retirees before Medicare?

Early retirees face significant health coverage costs before Medicare eligibility at age 65. COBRA premiums can often exceed $1,500 to $2,000 per month for a family. Utilizing private marketplace options via MNsure or structuring distributions to qualify for tax subsidies can help mitigate these costs, though each option carries specific tax trade-offs.

How does Minnesota tax retirement account withdrawals?

Minnesota taxes traditional 401(k) and IRA withdrawals at ordinary state income tax rates, which range from 5.35% to 9.85% as of 2026. This tax is in addition to federal income taxes. Roth IRA withdrawals are generally tax-free if you meet the five-year holding period and are over age 59 and a half, making Roth assets highly valuable for managing state tax exposure.

Should I withdraw from my taxable brokerage account or IRA first?

Generally, withdrawing from taxable brokerage accounts first allows your tax-deferred IRA and 401(k) assets to grow tax-deferred for longer. However, a dynamic withdrawal strategy that blends taxable, tax-deferred, and tax-free Roth distributions can often yield a lower lifetime tax bill, especially when planning around Medicare premiums and future Required Minimum Distributions.

Find Out Where You Stand in 5 Minutes

If you are wondering whether $750,000 is enough to retire at 62, you do not need another article. You need a clear picture of your own situation. Our complimentary Financial Health Quiz takes about five minutes and gives you a personalized snapshot of where you stand today across retirement readiness, tax efficiency, income planning, and risk management.

No cost. No obligation. No scheduling required. Just answer a few questions and get immediate clarity on what may be working and what may need attention before you make the transition.

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