People enjoy a warm summer day at the Old Port in Montreal, Canada.
Dreamstime
Canada has a lot going for it as a retirement location: stunning natural beauty; vibrant cities like Vancouver, Montreal and Toronto; a national healthcare system that picks up most costs for expats after three months. And of course there is poutine, the hardy Quebecois dish that will get you through the coldest of nights.
The rub is that retiring in Canada is harder and more expensive than you might guess. Even though the numbers have risen in recent years, fewer than 12,000 Americans moved to Canada in 2021.
If you are thinking about heading to the Great White North for retirement, here are some things to keep in mind:
There’s No Official Retirement Visa in Canada
Instead, there are a variety of different programs to establish residence in the country. The majority of Americans who retire in Canada are either dual citizens or have a Canadian spouse who can bring them in under the family sponsorship program.
If your children or grandchildren are Canadians, there is a special parent and grandparent super visa. It allows eligible parents and grandparents to stay in Canada for up to five years at a stretch, provided you meet specific requirements.
The Business Immigration Program lets entrepreneurs move to Canada to start a new business. You must make minimum investments in your business, which could vary from city to city and province to province. For Toronto, Ontario, for instance, that minimum investment amount is C$600,000. However, an investment of just C$150,000 can get you permanent residency in Prince Edward Island.
That said, a U.S. citizen need not necessarily immigrate to Canada to spend considerable amount of time there, says Cori Carl, author of Moving to Canada: A Complete Guide to Immigrating to Canada Without an Attorney. “Whether visiting Canada for business or personal reasons, U.S. citizens can stay in Canada for up to six months,” she says.
Canada Isn’t Cheap
From grocery to gasoline and rental accommodation to gadgets, the price tags for most things in Canada will take Americans by surprise, says Tiffany Woodfield, a financial advisor and the co-founder of SWAN Wealth Management, in Kelowna, British Columbia. This is particularly true in the big cities, Toronto ranks among the 100 most expensive cities in the world. Vancouver is nearly as expensive.
“Several [American] clients have confirmed if the exchange rate is ignored, the cost of groceries, hair cut or having their house cleaned is close to double compared with what they paid in the U.S.,” she says. (A Canadian dollar is worth about 75 cents in the U.S.)
It is little surprise that Canadians living in border towns routinely nip across to the U.S. side for cheaper gas, gadgets and groceries.
However, what Americans find most shocking is the steep Canadian real estate prices. “Most of our clients have sticker shock when they see the prices of homes in Canada compared to the U.S., especially in the major city centers in Toronto and Vancouver,” Woodfield notes. The average price for a detached home in Toronto or Vancouver is around $1.4 million in American dollars.
The Canadian Healthcare System Has Its Wrinkles
One of the biggest draws for American retirees in Canada is the country’s publicly funded universal healthcare system, which ensures about 70% of Canadian and permanent residents’ medical services are covered. This includes doctor visits, hospital stays, emergency services, surgeries and maternity services. It can cost up to $4,000 annually to cover the other 30%, including dental care.
There is a three-month wait before you are covered by the Canadian system, so you are advised to purchase health insurance during then or continue to use your U.S. insurance or Medicare in that interval.
The bad news: Some medical procedures are tougher to get in Canada. Terry Ritchie, a certified financial planner and partner with Transition Financial Advisors Group Inc., based in Calgary and Phoenix, says some of his clients have had to “return to the U.S. for hip, knee surgeries and other procedures that were not readily available” in Canada.
Cross-Border Taxation Can Be Tricky
The U.S. carries out citizen-based taxation. Hence, retirees in Canada may still owe U.S. taxes on their U.S. retirement income, as well as any other Canadian earned income.
They also need to declare their worldwide income to the Canada Revenue Agency (the Canadian version of the IRS) for Canadian income tax purposes.
“Americans still have U.S. tax compliance issues with the IRS that will continue, and in some cases become more complicated, as a resident of Canada,” says Ritchie, a cross-border tax specialist.
The two countries have a treaty that includes provisions to prevent U.S. expats from paying taxes twice on the same income. But it can get complicated, and you will need an accountant familiar with cross-border taxation.
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Source: finance.yahoo.com