Soon to be retiring Mayo Clinic Physicians: 12 Important Questions that You Probably Should Be Asking about your Mayo Clinic Retirement (But May Not Be)
Whether you're just beginning your career at Mayo Clinic, juggling the financial demands of a busy medical career, or counting down the years until retirement, chances are you've had a few money questions that don't come with easy answers—so we've rounded up 12 of the questions we see the most from Mayo Clinic physicians, along with our answers.
1). Should I take my Mayo Clinic physicians pension as a lifetime monthly payment, or take the lump sum and roll it over?
While this is always an individualized choice that you should make after doing your own research or talking to your own professional advisors, for our clients, we generally recommend taking the pension.
A pension is a rare asset, and they aren't making many more of them today. Many pension plans have also been frozen to new enrollees. A pension generally helps protect a Mayo Clinic physician against the catastrophic risk that markets perform terribly and the physician outlives their money.
Generally speaking, most physicians have non-pension assets, so they aren't all in on the pension. However, Social Security and their Mayo Clinic pension are generally their only sources of guaranteed lifetime income, even if they live an exceptionally long life.
2). If I retire this year instead of working another year or two, how much pension income and medical support am I really giving up?
This type of question is actually best answered by the salaried financial planners who work in the Mayo Office of Staff Services. It is always best to get answers about your benefits directly from your employer, who has the most accurate and up-to-date information.
But just to get you started, to our knowledge, if you stop working, you may be able to stay on the Mayo Clinic Health Plan, although you may no longer receive subsidized rates. So there is always a potential health care cost to retiring early if you are under 65 years old.
Also, to our knowledge, working fewer hours may impact your service credit and pension payout. The critical level to stay above is 1,000 hours a year, below which you may lose additional benefits. However, even reducing your schedule to 0.75 or 0.6 FTE may still reduce your Mayo pension, to our knowledge and understanding.
For these reasons, we highly advise that you speak with one of the salaried financial planners in the Mayo Office of Staff Services, as they are the true experts on Mayo benefits for Mayo employees, and ask them to give you a projection or model of what your pension income would be based off the different options you are considering.
3). Do I have enough after taxes to retire—not just enough on a spreadsheet before taxes?
While this is a question, we got all the time, the answer really is individualized. What we mean is that retirement is a little bit like getting an airplane to fly - a little passenger jet doesn't require much fuel to make it go
but it takes a lot more fuel to keep a cargo jet in the air.
The size of your airplane is equivalent to your expenses in retirement, and your resources going into retirement are like your jet fuel.
Luckily, between Social Security and the Mayo Clinic pension, in our view, that is often enough fuel to keep a lot of small planes in the air. However, if you have a more comfortable lifestyle, you may need fuel beyond what Social Security and the Mayo Clinic pension provide.
In this case, the question rightfully asks how much fuel you are going to have after taxes. That is super important, as many people don't adequately consider taxes until they are virtually retired.
The general rule is that your Social Security, pension, and withdrawals from tax-deferred or pre-tax retirement accounts may be subject to ordinary income taxes. It is not uncommon to give at least a quarter, and sometimes a third, of your taxable retirement income back in taxes. For higher earners in high-tax states, this can be even higher, in our experience. Keep in mind that some states have special rules for retirement income that can result in lower taxes in those states as well. Even some higher tax states like California have those rules, so it is worth considering how your pension and tax-deferred retirement income will be taxed when considering retirement locations.
Your taxable accounts may be subject to lower taxes, with often 0–25% of income or gains paid back in taxes in many states. However, that depends on the type of income or gains you receive and how good you are at keeping taxes low, if that is a goal of yours.
Your Roth accounts generally allow you to distribute assets tax-free, as long as you meet the applicable requirements, such as the five-year rule. Of course, check this information with your licensed tax professional, but that is generally what we've seen in our experience.
So, in short, it is good that you consider the after-tax numbers, because that is what matters. However, whether you have enough to retire is truly an individualized question with an individualized answer.
It is sort of like a patient asking, "What tests, medicines, or procedures would help me achieve my health goals?" The answer is not going to be the same for all patients, and the best answers come from a highly personalized approach, in our view, similar to how the physicians at the Mayo Clinic practice medicine.
4). What happens to my Mayo Clinic 457(b) when I leave, and when should I take distributions?
This question is sort of a balance between the Mayo Office of Staff Services, your own financial advisor, and your own family.
Here is the deal—to our knowledge, the Mayo Clinic 457(b) can be paid out in a lump sum or in installments over 5, 10, or 15 years. Of course, you should always confirm that with the Office of Staff Services and their in-house financial planners.
Longer term, there are a few things to consider. Lump sums often don't work out well for people because they can result in a giant tax hit in a single year. The lump sum might even come in a year when you were still working for most of the year, so it can create a huge tax spike on top of the other income you earned that year.
The 457(b) distributions can also interfere with Roth IRA conversions, if you want to do them, by increasing your taxable income in the early years of retirement.
Finally, there is the state tax consideration. At the federal level, distributions from a nonprofit 457(b) have generally been taxable as ordinary income, in our experience. However, not every state taxes retirement income the same way, to our knowledge. So, depending on where you plan to live in early, mid, and late retirement, state taxes may play a role in the distribution period you select for your 457(b).
To our knowledge, retired Mayo Clinic physicians may still be able to meet with the Office of Staff Services once per year in retirement. However, that may be insufficient given the normal changes in life that our physician clients experience during retirement.
That is why the answer to this question may be more individualized and something worth discussing with your own financial advisor or tax advisor.
5). How do I coordinate the pension, 403(b)/401(k), 457(b), Social Security, and my investments so I do not overpay taxes?
While this is a truly individualized question—and the answer depends on your situation, much like how the medicines, procedures, and tests are different for each patient—our general philosophy for our clients is to treat these three sources of income as separate buckets.
For your pension and Social Security, beyond selecting which state you live in during retirement, there generally isn't much you can do to lower the taxes. The state tax decision can be significant, but that largely depends on where you choose to live.
And surprisingly, you shouldn't assume that higher-tax states like California or New York tax Social Security benefits, because they generally don't, regardless of your income, in our experience.
There is a separate set of tax rules for pre-tax retirement accounts and pension income (as opposed to Social Security). The rules are too numerous to cover here, so below we've simply included a visual that illustrates the potential tax savings, in our estimation, that some Minnesota retirees might experience by retiring in other states compared with what they might pay if they remained in Minnesota.
We've included a few of the more popular retirement destinations for Minnesotan's below (Wisconsin, Airzona, Illinois, Texas and Florida).
There are other things you can do to manage taxes on pre-tax retirement income besides living in a state with more favorable tax treatment of retirement accounts. These include thoughtfully timing your distributions and considering Roth conversions. However, once required minimum distributions (RMDs) begin at age 73 or 75, depending on your birth year, these strategies tend to become less effective, in our experience.
In our view, 457(b) payments should also be thoughtfully timed to avoid unnecessarily large spikes in your taxable income and, potentially, your taxes.
6). Will our medical coverage be affordable before Medicare, and what changes once I become Medicare-eligible?
This question is best directed to the salaried financial planners at Mayo Clinic's Office of Staff Services, because they'll have the most up-to-date information on the current cost of healthcare coverage through Mayo Clinic if you choose to stay on the Mayo Health Plan after you're no longer an employee.
As a general rule, though, unsubsidized health insurance can cost as much as $12,000 to $17,000 a year for an individual in their 60s, and often $24,000 to $33,000 a year for a couple who are both in their 60s and purchasing private health insurance, to our knowledge and based on our experience.
So, unsubsidized health insurance is expensive and should definitely be planned for. But in our experience, it's generally not an insurmountable financial challenge for physician families.
7). Should I keep the Mayo life-insurance benefit after I retire, or replace it, reduce it, or let it go?
Once again, this is a good question for the financial planners at Mayo Clinic's Office of Staff Services. They can help you estimate what your premiums might be, if any, after you retire, and what your options are if you decide not to keep the policies.
As a general rule, permanent life insurance policies, including whole life policies, sometimes accumulate enough cash value that you may be able to stop paying premiums out of pocket while keeping the coverage in place.
Universal life insurance policies can sometimes be less expensive initially but may require additional premiums later in life, depending on how the policy performs and how it's structured.
Overall, this is the type of question we generally recommend asking the financial planners at the Office of Staff Services, since they're likely to be the most knowledgeable about Mayo Clinic's employee benefits, insurance options, and associated costs.
8). How do I protect my spouse if I choose the pension option that gives me the most income?
We are not aware of any way to fully protect your spouse if you choose the life-only pension option, which generally offers the highest monthly income but stops paying when you pass away.
For our own clients, we rarely recommend selecting a life-only payment. Instead, we generally encourage clients to consider joint-and-survivor benefits so the pension can provide income throughout both their lifetime and their spouse's lifetime.
In my 16 years of experience working as a financial advisor to physicians and otherly ,highly compensated professionals, pensions and annuities offered through employers are often highly competitive, if not superior, to what is available in the private marketplace.
This makes sense when you think about it. With an employer-sponsored pension, administrative costs can be spread across many employees, and there generally aren't the same sales and client recruitment costs that exist in the private annuity market.
Selling annuities can be difficult. Insurance companies often pay agents commissions for finding customers and helping them through the purchasing process. Depending on the product, those commissions can sometimes represent 2–10% of the total premium. So, on a $1,000,000 annuity, that could potentially mean $20,000 to $100,000 in commissions.
Now, this isn't meant to knock annuities or criticize the people who sell them. Annuities can play a valuable role in retirement planning, much like pensions can. The point is that employer-sponsored pensions may have meaningful cost advantages.
But there's another reason we generally favor joint-and-survivor benefits.
In my 16 years of providing financial advice, I've seen people bet against the pension or insurance company and more often than not regret it. For example, some people who chose a lump sum instead of lifetime pension payments found themselves spending down their money much faster than they anticipated.
Insurance companies and pension plans use actuarial calculations to price these benefits based on factors such as life expectancy, interest rates, and your ongevity risks that they're assuming.
In general, life-only and joint-and-survivor pension options are designed to have similar actuarial values. The life-only option pays more each month because the payments stop when you die. The joint-and-survivor option generally pays less each month because payments can continue for your spouse's lifetime.
That means selecting the life-only option doesn't necessarily give you more money over your lifetime as a couple. It simply changes how much you receive each month and who bears the risk if one spouse lives considerably longer than expected.
There can certainly be good reasons to choose a life-only pension, depending on your circumstances.
But in our opinion, a joint-and-survivor pension can take some of the catastrophic risk of running out of money off the table, particularly for the surviving spouse. That protection can be incredibly valuable, and in our experience, its value is often underestimated by clients and people approaching retirement.
9). Have I met every service, age, notice, beneficiary, and paperwork requirement before I submit retirement papers?
This is a great question, and it's one that we highly encourage you to discuss with the financial planners at Mayo Clinic's Office of Staff Services. They're in the best position to walk you through all the requirements, deadlines, notices, and paperwork needed to secure the retirement benefits you're seeking from Mayo Clinic.
10) Can I cut back first—work part-time, consult, or continue limited clinical work—without accidentally damaging my retirement plan?
To our knowledge and experience, reducing clinical work can also reduce retirement income. Of course, this isn't necessarily a bad thing. At a certain point, we all have enough and may want to spend our time doing other things.
However, we'd highly encourage you to meet with the financial planners at Mayo Clinic's Office of Staff Services and ask them to project exactly how your planned reduction in clinical work might affect your benefits and retirement income. This is something they should be well-positioned to help you understand.
11) How much of my retirement income can I count on for life, and how much depends on markets?
In our view, generally pensions and social security can be counted on for life although social security may need to be reduced in the future due to funding gaps and demographic issues (we generally adjust our client projected social security payments downwards).
We do not currently believe the Mayo Clinic Pension requires an adjustment since to our knowledge it is well funded as of the writing of this article in October 2026.
Most everything else will depend on the markets. If you don't feel comfortable converting your investments to a retirement paycheck of lifetime income and are interested in speaking with a fiduciary financial advisor you may schedule a call here.
12). Who at Mayo can give me the actual answer for my particular employment history, rather than general retirement advice?
Our advice is to reach out to Office of Staff Services and talk to their financial planners about how to get this information.
Once You Have the Mayo Clinic Retirement Questions Answered, What Comes Next?
As Mayo Clinic physicians get closer to retirement, we've noticed something interesting. The questions often begin with Mayo Clinic benefits—how the pension works, what happens to the 457(b), and when they can afford to retire. But once those questions start getting answered, the conversation often shifts.
Instead of asking what Mayo Clinic will provide, physicians begin asking how to make everything they've worked so hard to accumulate actually work for them and their families.
That's when questions about investment risk, creating dependable retirement income, protecting against market downturns, and making their money last for the rest of their lives start becoming much more important.
These aren't necessarily Mayo Clinic-specific questions, but they are some of the most important questions physicians face as they transition into retirement.
Creating retirement income: How much of your income will be guaranteed? How much can your investments realistically provide? How do you coordinate your pension with the rest of your portfolio?
Managing investment risk: How should your portfolio change in retirement? How much risk can you afford to take? What happens if the stock market falls shortly after you retire?
Making your money last: How much should you keep liquid? How do you coordinate your retirement accounts? How do you balance enjoying retirement with protecting your spouse and leaving money to your heirs?
If you are approaching retirement at Mayo Clinic, are looking to work with a Stanford and UC Berkeley educated fiduciary fee based financial advisor and would like to discuss your situation with D.R. Harris and Co. you may schedule a meeting by clicking here.
If you aren't ready to have a conversation you can learn more about Daniel Harris and D.R. Harris & Co. here.
Disclaimer: The information in this article is for educational and entertainment purposes only. Neither Daniel Harris nor D.R. Harris & Co. is your financial advisor unless you have a signed written advisory agreement with D.R. Harris & Co. Our tax projections and images are estimates only, based on our knowledge of the tax rules for the various states, and should be checked and confirmed with your own professional tax preparer or your own independent tax advisor before taking any action based on what you learned in this article. Your actual taxes will likely vary from these estimates, and the images exist merely to show the directionality of the taxes, to our current understanding, depending on where you spend your retirement and would be unlikely to match any one person's actual results. We recommend that you do your own research and talk to your own professional advisors before acting on any of the information you read about in this article. Moreover, we encourage you to confirm all benefits, deadlines, and rules with Mayo Clinic and the financial planners in the Office of Staff Services at Mayo Clinic. While we believe the information in this article is generally correct at the time it is written, we make no warranties as to its accuracy, and you should do all of your own independent research to confirm any of the information in this article before acting on anything you read about in this article. You should not assume this article will be updated, and it could become inaccurate if circumstances or rules change over time. However, we do believe it is generally accurate at the time it was written, as of 10/14/26, based on our current knowledge at the time of its writing.
