Many retirees often seek warmer climates by heading south, but what if you’re considering a move north instead? Retiring to Canada offers several advantages, such as access to universal healthcare and affordable housing. Plus, for those with family and friends in the U.S., it allows you to enjoy the perks of expat life while remaining close to home. However, if you’re planning to retire in Canada, it’s important to prepare in advance. Working with a financial advisor can help you create a tailored retirement plan for living abroad.
Explore Visa and Residency Options for Retiring in Canada
If you’re planning to spend part of your time in Canada, you can obtain either a tourist visa or a family visa. A tourist visa allows you to stay in Canada for up to six months each year. This visa provides some benefits, such as the ability to purchase a vacation home and set up a Canadian bank account, allowing you to enjoy part of your retirement in Canada. However, you’ll remain a U.S. resident, which means you’ll still need to pay U.S. taxes.
Canadian citizens or permanent residents can sponsor parents or grandparents through the “super visa” program. This visa permits a stay of up to two years, but it does not grant access to Canada’s universal healthcare system. Additionally, your child or grandchild must be a Canadian citizen or permanent resident, and must provide a letter stating they will be financially responsible for you during your stay.
Retirees with family members in Canada may also explore permanent residency through the Parents and Grandparents Program. Family sponsorship accounts for about 30% of all immigrants to Canada. Canada also offers permanent residency based on humanitarian and compassionate grounds.
You can also apply for permanent residency via the Express Entry system. If accepted, you’ll gain access to various government programs and social services, including universal healthcare. This is also the first step toward Canadian citizenship. For those with children, permanent residents pay significantly lower tuition fees at Canadian universities compared to international students.
Estimate Your Cost of Living
According to October 2024 data from Numbeo, Canadian rent prices average $1,350 for a one-bedroom apartment in a city center, while a three-bedroom in a similar area would run you almost $2,185. But these prices can vary significantly by the city of your choosing, with Toronto and Vancouver having particularly high costs of living. That variance extends to home prices, too.
Depending on where you’re moving from and to, your housing costs may be lower or higher than they are now.
Other costs, like food, gas and sales tax, are all more expensive in Canada. If you don’t have a permanent residency, you’ll need to get international health insurance, too. So while the favorable exchange rate helps some, you still might be in for an increase in costs if you’re moving from the U.S. to Canada.
Healthcare in Canada
Canada offers universal healthcare, which is available to all citizens and permanent residents. While emergency services are available to anyone in the country — even without a government-issued health card — walk-in clinics also exist, but may cost a fee.
Taxes pay a portion of universal healthcare, but residents and Canadian citizens also pay monthly or yearly premiums. The government also has educational programs made to increase public awareness to reduce potential healthcare costs. Universal healthcare, along with educational programs, increase life expectancy and quality of life for Canadian citizens and residents.
Taxes in Canada
While federal income taxes in the U.S. range from 10% to 37%, Canadians have a different tax structure. For 2024, Canadians making $55,867 CAD or less receive a 15% tax rate. From $55,867 CAD to $111,733 CAD, taxes are 20.5%. From $111,733 CAD to $173,205 CAD, it’s 26%. For $173,205 CAD to $246,752 CAD, it’s 29%. And for Canadians earning more than $246,752 CAD, taxes are 33%.
It may be helpful to compare these figures to the U.S. tax brackets, though be sure to use a tax calculator to see how state taxes factor in.
Beyond the federal level, taxes in Canada also vary by province. All provinces have some level of local tax and are based on a percentage of the federal tax system. For 2024, Canadians also will pay an Employment Insurance tax of 1.66% of their gross employment income.
Canadians also pay less of their wages into their equivalent of Social Security compared to U.S. residents. In 2024, Canadians will pay 5.95% of gross employment income into the Canadian Pension Plan (CPP), up to $68,500. Medicare is a part of Canada’s universal healthcare plan. Americans will pay 7.65% of their wages into Social Security and Medicare in 2024.
Weigh the Pros and Cons
Before you head over the border, review not only your financial situation, but your emotional one, as well. There might be other reasons to stick around (or ones that encourage you to leave). Ask yourself a few questions, like:
- Will I be able to find work if I need to? Retiring doesn’t always mean you’re no longer working. Sometimes you want a job, perhaps part-time, to stay busy or earn a little extra cash. What will the job hunt look like?
- What happens to my benefits? If you collect disability, Social Security or other U.S. benefits, there’s a chance those don’t roll over when you move out of the country.
- Am I financially dependent on someone else? If you rely on family or a loved one to take financial care of you, moving to Canada might not be an option.
- Does someone else financially depend on me? If you’re responsible for someone else’s financial well-being, this may hold you back from moving.
- Can I move wherever I want to? If there’s a state in the U.S. you wouldn’t live in, there’s a chance there are places in Canada you wouldn’t move to, either. If the cost of living is a factor in where you can and can’t move, you might not have as many choices.
- Would it be easier to move? When you consider your residency status, cost of living and realistic expectations, you may find that moving to Canada might not be as easy as you thought.
- What if I stay? If you collect government benefits, your home is paid for or you have a low cost of living, and can afford to stay through retirement, think about what you’d be losing out on.
Bottom Line
Retiring in Canada might sound appealing. But relocating to another country might turn out to be more work than you’re willing to put in. Review your finances, your long-term care and how the move can impact your loved ones before you decide. Weighing all your options can help you make a better decision than if you were to act without much consideration.
Tips for Retirement
- Consider talking to a financial advisor about what’s involved in retiring in Canada. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Whether you want to retire in Canada or the United States, or any other country for that matter, it’s important to have a clear sense of your financial resources. Use SmartAsset’s retirement calculator to gauge your readiness for retirement.
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