Yahoo Finance Does it make sense to leave the US and flee to Canada? Here's how much money you need to retire in the Great White North — the number might surprise you
After a sizzling start to the summer that has already given us record-breaking heat, one’s thoughts could easily turn to settling down somewhere with a cool climate.
Now, add in vast mountain landscapes between vibrant cities, famously affable neighbors and access to universal health care, and you might find yourself daydreaming about one day retiring in Canada.
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Soon-to-be retirees have an overwhelming number of possibilities where they can spend their golden years. Many are opting for lives outside of America in places where the cost of living is low and the U.S. dollar can go far while still possessing desirable amenities.
Canada is a place where retirees can enjoy an abundance of outdoor adventures and incredibly cosmopolitan and multicultural metropolises. In the wilderness between cities, activities such as hiking, fishing and skiing can become everyday possibilities. The U.S. dollar has also been consistently stronger than its Canadian counterpart over the years, making things all the more appealing. At the current exchange rate, $1 nets you around C$1.31.
But like many things associated with retirement these days, packing up and moving north of the border isn’t all that simple.
How much is needed to retire in Canada?
Despite the strength of the U.S. dollar versus the loonie, the cost of retiring in Canada may be surprising to Americans.
A recent Bank of Montreal survey suggests Canadians believe they need C$1.7 million to retire, or roughly $1.3 million. That’s about equal to the expectations of Americans, who say they need $1.27 million to retire comfortably.
Even if it ends up costing the same amount overall to retire in Canada as it would in the U.S., there are other factors to consider regarding one’s retirement needs.
There are also tax hurdles you may need to deal with, and certain requirements must be met to access universal health care.
Read more: Here are 7 amazing 1-week vacations you can do for around $1,000
Here’s what it takes
If you’re considering Canada, numerous expatriation-focused websites can guide you through the sometimes tricky paths to gaining long-term entry to the country, as well as the tax implications and liabilities of maintaining dual citizenship should you choose that route. Here are some additional distinctly Canadian considerations.
Health care
Canada’s universal health care is only accessible to citizens and permanent residents. There are several paths to gaining permanent resident status. In the meantime, you may have to acquire private insurance.
The nation’s health-care system can provide access to comprehensive coverage, although it’s important to note that certain provinces may have longer wait times for certain procedures, and prescription medications may not always be fully covered. Access to more complex procedures have often sent American retirees back to the U.S. for care.
Taxes
American citizens must file tax returns annually with the U.S., regardless of where you live. Your tax obligations to Canada can depend on whether you’re considered a resident or visitor.
Canada has a progressive income tax system, meaning higher-income individuals pay higher tax rates. Provinces also have their own tax systems as well.
Exchange rates
Retirees considering Canada should be mindful of exchange rates if their retirement savings are in a different currency. Things can change quickly, and fluctuations in currency values can significantly impact purchasing power and overall financial stability. The price tags on common goods — such as gas or groceries — can be shocking if you ignore the currency exchange rate.
Retiring in Canada offers numerous advantages, including a high standard of living, excellent health care and beautiful landscapes. But it’s essential to carefully assess your financial situation and consider factors such as the cost of living, health coverage, taxes and lifestyle preferences.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
