If you’re interested in moving north for retirement, it’s important to think about the implications the decision may have. “Many Americans assume that moving to Canada is easy and that there is a special path for Americans because our two countries are so closely linked,” said Cori Carl, author of “Moving to Canada: A Complete Guide to Immigrating.” to Canada Without an Attorney”. ‘, who lives in Toronto, Ontario. “That’s not the case, though. There’s no easy way for Americans to retire in Canada.”
Before you plan to retire Canada, imagine the following situation:
— What type of visa and residence to pursue.
— How your tax situation will change.
— What the cost of living will be.
— Your retirement goals and lifestyle preferences.
Use the following guidelines to help search north for: Canada for retirement.
Decide if you want to be a tourist
When Americans of any age enter Canada, they automatically receive a tourist visa that is valid for up to 183 days. If you want to stay longer, you can fill out a small amount of paperwork and get permission to extend your stay. Like a tourist, you can buy a vacation home and open a bank account in Canada. “I’ve done this myself and never had any problems at the bank or at the border,” Carl says.
This can be a viable option for those who plan to divide their retirement time between two or more locations. If you spend six months of the year in a place in the south of the US, you might find it appealing to live in Canada for the rest of the time. You are considered a US citizen and must pay US taxes through this configuration. You do not have access to Canadian health care coverage and are not subject to Canadian taxes.
Explore other visa options
If you have children or grandchildren in Canada, you can apply for the Supervise for Parents and Grandparents. This type of visa allows you to live in Canada for up to two years in a row, but it does not provide access to provincial health coverage or other residency benefits. To be eligible for this super visa, your child or grandchild must be a citizen or permanent resident of Canada and write a letter promising to support you financially for the duration of your visit.
Understand what permanent residence means
For those who plan to stay in Canada for more than 183 days per year or who are not eligible for a family supervising visa, it may be possible to apply for a permanent residence permit. As a permanent resident of Canada, you have access to government programs such as health care. Permanent residency can also lead to Canadian citizenship.
If you want to become a permanent resident, “The older it gets, the harder it gets,” says John Richardson, a Toronto attorney who assists U.S. citizens in Canada. Canada does not necessarily have a retirement visa. Paths to permanent residency include an immigration process called “Express Entry,” set up for those who have certain skills or want to run businesses in Canada. Some Canadian provinces have immigration options based on graduating from Canadian universities or open to people in specific professions. If you are planning a second career after retirement and are considering working for several years, these may be viable immigration options. It is likely that this will require planning before retiring in the United States.
Don’t forget taxes
Moving to Canada does not mean you have to give up your US citizenship. You can receiving social security benefits while living in another country, but you probably still will be subject to US taxes if you also earn additional income. This is because the United States levies citizen-based taxes. “Retirees in Canada may still owe U.S. taxes on their U.S. retirement income, along with other Canadian income,” said Nathalie Goldstein, CEO of MyExpatTaxes, who is originally from San Jose, California and currently lives in Vienna, Austria.
There is a tax treaty between Canada and the United States that specifies which country has the tax rights on things like Social Security benefits and other foreign retirement income. “If the tax treaty states that the US still has tax rights, American retirees should plan their money wisely, as they most likely return some of it to the IRS every April 15,” Goldstein says.
In addition to the IRS, you may need to declare your worldwide income to the Canada Revenue Agency, which is the Canadian version of the IRS. “At first glance, it appears that American retirees are being taxed twice by both the US and Canada,” Goldstein says. “That’s not the case, though, if they can optimize their tax returns using the benefits enshrined in the US and Canadian tax treaties.”
Consider the cost of living
Daily expenses in Canada can be lower or higher depending on the area where you live and the lifestyle you choose. “Housing costs are lower and permanent residents get free health care,” said Troy Daum, a financial planner and founder of Wealth Analytics in San Diego who has worked with clients planning to retire in Canada. “However, many are surprised to find that almost everything else is more expensive in Canada.” The sales tax may be higher than where you currently live. “Most foods are imported from the US and are a lot more expensive,” Daum says.
If you plan to drive in your new area, your current vehicle may need to be modified to meet Canadian government emissions and safety standards. “Gasoline is also more expensive in Canada,” Daum says. You may pay between 20% and 25% more than what you currently spend on fuel.
For those who only spend a few months of the year in Canada and don’t become permanent residents, you may need to make a purchase international health insurance. “Find a plan that covers you if you get sick in Canada before you leave,” Daum says. You generally cannot use Medicare for: healthcare in another country.
Talk to a professional
Due to tax complications, residency and visa decisions, and various costs associated with the transition, it may be helpful to speak with a lawyer or Financial Advisor before heading north. Without careful financial planning, “Moving from the United States can expose you to all kinds of stress, taxes, and penalties,” Richardson says. Find a professional who understands issues from both a US and Canadian perspective to help evaluate the potential financial impact of your relocation to Canada. View your retirement accounts, estimated cost of living in the new place, and expected Social Security benefits. Then look at health insurance choices, travel plans, and lifestyle preferences to determine where best to spend your retirement.