Because the countries are similar, many Americans think retiring to Canada will be easy. However, that isn’t the case. Canada doesn’t have a separate retirement visa program. Instead, prospective retirees have to find other ways to make the move.
There are currently over one million Americans living in Canada. It’s a popular choice because of the scenery, the publicly funded healthcare system, and its proximity to the United States. But if you’re considering making a move, you’ll need to plan.
Here’s what to consider and how to retire in Canada from the USA.
- Research your visa options.
- Consider the cost of living.
- Figure out your tax situation.
1. Research Your Visa Options
Canada offers an automatic tourist visa for up to 183 days. This is an option to consider if you plan on splitting your time between the United States and Canada. Maybe reside in the U.S. for six months of the year and spend the rest of the time in Canada.
With the tourist visa, you’re still considered a U.S. citizen and should continue to pay U.S. taxes. In addition, you won’t qualify for Canadian health coverage or be subjected to Canadian taxes.
If you want to stay past the 183 days, you may qualify for a parent or grandparent super visa. In these cases, your child or grandchild needs to be a permanent citizen and provide documentation to confirm they will support you during your stay.
With this visa, you can reside in Canada for two years at a time but will not have access to health coverage or other resident benefits.
If you’re not eligible for the family visa, you’ll have to apply for Express Entry. This is the route to permanent residency in Canada and is set up for those with certain skills or people looking to start a business. This is a good option if you want to continue working after retirement.
2. Consider the Cost of Living
Before packing up and heading North, it’d be wise to consider your retirement goals, lifestyle preferences, and how much all those things will cost.
Americans are often surprised to learn that many things in Canada are more expensive. Of course, this does depend on where you plan to live and if you reside in a big city or not.
Not long ago, Canada and the United States had similar average housing prices. However, that statistic is a thing of the past, with Canadian houses now almost twice as much as their American counterparts. On top of that, Canadians typically pay more in sales tax, groceries, and fuel.
If you’re a retiree on a budget, this could wreak havoc on your quality of life. If you enjoy dining out, museums and other cultural events, spending your disposable income on excess bills might stop you from enjoying what you truly love.
The question to ask is, if you have enough money saved, or do you plan to continue working to make up for these added costs?
How To Decide Where To Live
As noted earlier, the cost of living depends on where you live. The cities will always cost more. Besides that, there are other factors to consider – climate and culture.
If you come from a milder part of America, you won’t be used to the cold Canadian winters. Generally speaking, the Vancouver area and Maritime provinces experience milder winters than the rest of the country.
If you’re averse to snow and cold, consider spending the winter months in the U.S. and the rest of the time in Canada.
As for culture, Canada’s big cities will offer plenty of it. Many Americans want to visit the French-speaking Quebec province to experience a different lifestyle.
3. Figure Out Your Tax Situation
No matter what, you need to pay your taxes – even if you move to another country. Planning for your future retirement takes the stress out of the situation later on.
As a U.S. citizen, you have to pay tax on your income, but what if you earn income while in Canada? The answer depends. Canada and the United States have a tax treaty determining which country has taxing rights.
In some cases, retirees will need to file taxes in the United States and Canada. However, that doesn’t mean you’re double-taxed, thanks to the treaty between the two countries.
In comparing tax rates, the United States wins out. Tax rates in the states are significantly lower than in Canada. State taxes are often lower than provincial ones, too.
The bottom line is to visit with a tax professional that understands tax laws in the U.S. and Canada. If you know beforehand that you plan to live in Canada, it’s also a good idea to meet with a financial planner that can help you navigate each country’s rules.
What About Healthcare While Living In Canada?
Americans are very aware of Canada’s publicly funded healthcare. For many prospective retirees, that might be a big reason they’re looking to live up north.
However, just because you’re living in the country doesn’t necessarily mean you have access to free healthcare.
If you’re not a permanent citizen and only live in Canada part-time, you aren’t eligible to enroll in the universal healthcare program. Instead, you’ll need to obtain your own private health insurance to cover all your medical needs.
Conclusion
Looking to retire in Canada? You need to figure out a few things before making the jump – mainly considering your visa options, cost of living expenses, and how taxes will work.
While there are many beautiful places to live in Canada, there are others that you might want to think twice about. Before making your decision, check out these worst places to retire.
