How To Retire to Canada

Written by Tiffany Woodfield, Portfolio Manager, Financial Advisor, CRPC®
Reading Time: 10 minutes 20 seconds.

When you start planning your retirement, there is so much to consider. 

Where you want to live tends to be one of the most important decisions you'll make. It often determines your happiness level and whether you're able to have the lifestyle you desire.

Since you're reading this post, I know you're here for tips on how to retire to Canada. Either you've decided or are close to deciding on retiring to Canada. If that's the case, keep reading because, in this article, I'll walk you through how to retire to Canada.

If you're coming from the US and need further tips on the moving side of things, download our Canada-US moving checklist HERE.

My experience with this topic comes from the fact that I'm a financial advisor licensed in Canada and in the US. I speak to a lot of individuals and couples who are planning moves across the border. Many are planning on retiring to Canada, while others are simply moving to have a better lifestyle. Regardless of the reason, many of the steps you need to take are the same.

Having been through this process with so many clients, I know that you can do this. And it's not as complex and difficult as it seems.

One of the areas that many people get stressed out about is the financial side. You're likely worried about whether you're going to have to pay additional taxes and how you'll handle your retirement investments. You may also be concerned about whether your retirement accounts from the country you've been working for the last few years will be accessible to you in Canada. These are all valid concerns. But rest assured, there is a solution for everything.

There are ten things you should consider when you're planning on retiring to Canada. Many of these steps will apply to you regardless of where you're moving. But if you're planning on retiring to Canada from the US, pay special attention to #7 and #8 so that you can avoid tax and investment issues.

If you are not considered a US person—in other words, you are not a long-term green card holder* or US citizen—the process may be simpler. But there are still important steps to take. Planning will make a world of difference in terms of how easeful and enjoyable taking that next step is.

Please keep in mind that this information is general. You will need to speak to a cross-border immigration lawyer for details on your specific situation.

*A long-term green card holder has held a green card for 8 of the last 15 years.

 

TABLE OF CONTENTS

1. Immigration Options - Basic Visas
2. Getting Your Permanent Residency
3. Healthcare In Canada
4. Choosing a Place to Buy Your New Home
5. Buying Real Estate in Canada - Important Tips to Follow
6. Speaking with Professionals Before Your Move
7. Bringing US Investments to Canada
8. Avoiding Dual Taxation if You're from the US
9. Canadian Culture
10. The Best Thing About Retiring to Canada

 

#1 Immigration Options - Basic Visas

Express Entry for Skilled Workers

Express Entry is an online application for permanent residency in Canada for skilled workers. You will follow a 4 step process to see if you are eligible:

1. Determine the programs for which you are eligible.
2. Organize and get your documents together. You will have to have a language test even if your first language is English or French.
3. Submit your profile. If you are eligible, you will be accepted and ranked based on a points-based system.
4. The final step is to receive an invitation and then apply for permanent residency in Canada. The candidates with the highest scores based on the points system will have 90 days to apply for permanent residency.

For more information, go to:
Immigrate through Express Entry - Canada.ca

Start-up Visa for Entrepreneurs

Canada has a Start-up Visa program for immigrant entrepreneurs planning on building a business in Canada that will create jobs for Canadians. 

You be eligible, you must have/do the following:

• a letter of support from a designated organization
• a qualifying business
• take a language test from an approved agency and include the results with your application
• bring enough money to support yourself and your family after you arrive in Canada

To apply, you will need to follow a few steps, such as giving your biometrics (fingerprints and photo), paying your application fees, and submitting your application. The processing time is 12-16 months but could be longer due to extenuating circumstances such as a pandemic.

There are steps to help you prepare. What steps you take depends on whether you are already in Canada or outside of Canada.

For more information, go to:
Start-up Visa Program - Canada.ca

Self-Employed Visa

The Self-employed Persons Program allows individuals to immigrate to Canada as self-employed persons. To qualify, you must have experience in cultural activities or athletics and make a significant contribution to Canada's cultural or athletic life. 

To learn more about the program selection criteria, check out the link below. You will also need to meet security, medical and other conditions. To apply, go to the website listed below, fill out the application package, pay your fees and submit your application. 

The processing time is approximately 34 months. So it's important to start this early.

For more information, go to:
Immigrate as a self-employed person: About the process - Canada.ca.

Family Sponsorship

Suppose you have a family member who is 18 or over and a permanent resident of Canada, a Canadian citizen, or a person registered in Canada under the Canadian Indian Act. In that case, they can sponsor you as a relative to live in Canada. 

Your family member must show that they plan to live in Canada when you become permanent residents. They must show that they will support you, your spouse or partner and dependent children financially. 

For more information, go to:
Sponsor your family members to immigrate to Canada - Canada.ca

If you live in Quebec, there are additional sponsorship requirements.

#2 Getting Your Permanent Residency

The processing time to get your permanent residency can vary.

• If you are a skilled worker, it usually takes approximately six months
• If you are self-employed, it is around 34 months
• For family sponsorship, it is on average 12 months
• For entrepreneurs with a start-up, it is about 12-16 months.

Keep in mind that due to COVID-19, the Government of Canada is emphasizing they cannot process applications as fast as usual, and processing times will vary. So your best bet is to get started early.

#3 Healthcare In Canada

Canada has a publicly funded health care system called Canadian Medicare. Everyone who is a permanent resident has access to this healthcare. But while overall, our medical system is outstanding, there are pros and cons about which you should be aware.

Benefits:

• If you are used to living in the US, medical care is a big part of your planning expenses. Whether it be for your monthly insurance premiums or an unexpected hospital stay, it's something for which you budget. You also may be limited to which hospitals you can visit, depending on your insurance plan. In Canada, because of universal health care, these are things you won't have to worry about any longer.
• You don't have to pay the hospital or physician directly or pay a deductible on a specific insurance level.
• Hospital stays, including maternity services, illness or surgeries, are all covered. The prescription medication you must take while you are in the hospital is also covered.
• If you're working, your employer may have an extended healthcare plan that helps to cover these costs not covered by the universal plan. But it is still much less costly than in the US.

Limitation:

• It isn't easy to find a family physician. Although there are walk-in clinics, this is particularly true in big cities. That said, if you have an unusual medical background, you are often moved up to the front of the waitlist. From observation, it seems that older citizens and pregnant women are given priority when getting a family doctor. That said, in smaller towns or medium-sized cities, getting a family doctor may not be as difficult.
• You will still pay for dental and vision care, prescription medication when not in the hospital, and other podiatry and chiropractic services.
• You still pay for medical examinations for work, insurance or driver's licence.
• Some clients complain that the level of service isn't the same as they would get from private healthcare in the US. Since it is a public system, this is understandable. You are considered a patient rather than a client when visiting a hospital or doctor in Canada.

Overall your medical expenses are much less when you live in Canada compared to the US. The level of service might not be as high, and you may have to wait longer for non-emergency procedures, but you will be paying out of pocket much less often.   

#4 Choosing a Place to Buy Your New Home

When deciding to move, one of the biggest decisions is where you will choose to buy your new home.

Canada is stunning and has four distinct seasons, which vary in duration depending on the province wherein you decide to live. On the west coast, Vancouver is known for its natural beauty, with mountains surrounding the beautiful Pacific Ocean. The climate is very mild, with reasonably warm summers and sunshine. The winters are the warmest of Canada's big cities, with little snowfall and, more often, rain in the winter months. Vancouver is almost always near the top of the worldwide "best city" studies. 

I've written an entire blog post about Retiring in Vancouver, so check it out if that's one place you're considering.

Toronto is Canada's largest city, with over 6 million people in the surrounding area. Unlike Vancouver, with its large mountains and ocean, Toronto is relatively flat. The weather has hotter summers with humidity and colder winters with considerably more snow than on the West Coast. However, what it may lack in natural beauty, it makes up for in culture. It is one of the world's most multicultural cities with various languages, cultures, food and arts. It is considered the hub of Canada and is where the banking and financial district is and the Toronto Stock Exchange.

#5 Buying Real Estate in Canada - Important Tips to Follow

I grew up in a family of realtors, and I had ingrained in me from an early age to buy location, location, and location. We all know homes get older, styles change, and new homes are always being built, but what you cannot change once you purchase is your location. 

Further to that, most agents suggest that you buy on the nicest street and buy the smallest home. They recommend stretching to buy the nicest home you can. Because the location is always so important, go to the nicest street you can. If all the homes go up, so will yours, even if it isn't the biggest or brightest.

At SWAN Wealth, as portfolio managers, we manage investments. People may be surprised that we always recommend having real estate as part of their investments for the future. It may not be as liquid—unless you are buying into a real estate investment trust (REIT), which is traded on the exchange—but it is still a good investment and adds diversification.

In Canada, unlike the US, the capital gains on your principal residence are not taxable. Hence, most real estate agents recommend buying the most house you can afford. If your house goes up in value by $500,000, you do not pay tax on this gain, which is a significant tax saving. Keep in mind there is no guarantee that Canada's government will not change these rules. Still, for now, capital gains on your principal residence are tax-free.

When buying real estate in Canada, keep in mind that the cost of homes varies dramatically depending on where you want to live. The most expensive areas are Vancouver, Toronto, Victoria.

#6 Speaking with Professionals Before Your Move

Planning a move has often been referred to as one of the most stressful times in a person's life. 

When you add to this moving across an international border, the pressure to make all the right decisions easily becomes overwhelming. It is so important to have a team that can guide you. It would be best if you had a cross-border accountant, cross-border lawyer and a cross-border financial advisor. 

Keep in mind that there are steps you can take a year or two before you move to help alleviate some tax traps, as well as in the year you move. So put your team together early. This will give you a leg up when you're finally ready to make a move.

#7 Bringing US Investments to Canada

Often, there are many moving parts with a cross-border move; you may not have considered what to do with your retirement plans, such as a 401(k) or IRA. 

Unless your advisor is licensed in Canada and the US, which is very rare, you may run into roadblocks. Due to FATCA Foreign Account Tax Compliance Act, US brokerage firms are informing clients that are non-US residents, they can no longer manage their accounts. 

While these rules are not new, they are being enforced more strictly than ever before. The result is that as a non-resident, you are at risk of getting a letter stating you have 30-60 days to either find another advisor or they will close out the account. Of course, closing out the account would be a major taxable event, and scrambling to find a new financial advisor who can help you now that you are living in Canada is highly stressful. 

One solution is finding a financial advisor or wealth management team licensed and regulated in Canada and the US. The term for this is a cross-border or a financial advisor licensed in Canada and the US.

When you work with a cross-border financial advisor, you do not have to collapse your US retirement plans, and you can have them actively managed as a non-resident of the US. This is particularly important when moving to Canada because taxation levels are higher here than in the US. Proper planning and having advice tailored to you as a US person living in Canada is essential if you want to avoid many tax pitfalls. When you work with a cross-border financial advisor licensed in Canada and the US, you can complete your financial transition ahead of your move.

#8 Avoiding Dual Taxation if You're from the US

When aiming to avoid double taxation, if you are from the US and now living in Canada, we suggest that you work with a cross-border accountant.

Find someone who understands how to maximize and fully use all the foreign tax credits. The second most important factor is working with a cross-border financial advisor. They can ensure you are not investing in the wrong tools, such as PFICs. If you invest in the wrong tools, you will cause an incredible headache for your accountant and end up with a larger tax and accounting bill.   Cross-border investment management and wealth planning have added complexity that should be carefully considered.

One of the most common traps is transferring an IRA into a Canadian RRSP or investing in Canadian mutual funds or Canadian ETFs.   

#9 Canadian Culture

Before working with many American clients, I don't think I understood what we have in Canada. The feedback from recent immigrants is that our culture is very accepting. It has been described as "softer" by one of my clients. They explained it by saying that in Canada, if you believe something and someone disagrees, it isn't in your face, and you would likely never know. 

Another client recently said that in the US, it is like the rug was lifted, and all these tensions and views are being raised. It isn't as peaceful. The feedback I have received is that Canada is more relaxed.

#10 The Best Thing About Retiring to Canada

The best thing about retiring to Canada is that you will be able to start your next adventure in a peaceful, organized, and accepting place. 

Most clients who lived in Canada previously feel it is like coming home. It is easy, comfortable and relaxed. You don't have such a weight on your shoulders. Both the culture and the support systems in place here help ease stress. The medical system alleviates some pressure as far as planning for healthcare, which is beneficial and attractive to most. 

Retiring to Canada with the US dollar is another bonus. You benefit from the currency exchange while still having the option to keep some US dollars to travel back to the US.  

Summary of Key Points:

• There are various routes to apply for permanent residency. Make sure you choose the one that is the fastest for you.
• Healthcare in Canada is publicly funded, but you may wait longer than you did in the US.
• To avoid double taxation, put together a team to work with before you move.
• If you plan ahead of time, bringing investments to Canada can be easy and simple.

Next Steps

If you’re planning your retirement and a cross-border move, please get in touch. At SWAN Wealth we specialize in cross-border financial planning and wealth management.

More Cross-Border Financial Planning Articles & Guides

These articles and guides will help you simplify your move and make sure you’ve got everything covered.

Cross-Border Estate Planning Guide

Roth IRA Canada: How to Manage Your Investments Across the Border

The Ultimate Financial Planning Resource for Dual Citizens or Green Card Holders Living in Canada

401k in Canada - How to Stay Onside with the IRS and Avoid a Large Tax Bill

Retiring to Canada - A Financial Planning Guide

Financial and Tax Planning for US Citizens Living in Canada

Canadian RRSP Facts for Dual Citizens, Expats and Canadians

 

Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete.  It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities.  The views are those of the author, SWAN Wealth Management, and not necessarily those of Raymond James Ltd.  Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision.  Raymond James Ltd. is a Member - Canadian Investor Protection Fund. Raymond James (USA) Ltd., member FINRA/SIPC. Raymond James (USA) Ltd. (RJLU) advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered.

About the Author

Tiffany Woodfield is a dual-licensed financial advisor and the co-founder of SWAN Wealth Management, along with her husband, John Woodfield. Tiffany specializes in advising clients who live both in Canada and the United States and need to simplify their cross-border financial plan, move their assets across the border, and optimize their investments so they can minimize their tax burden. Together Tiffany and John Woodfield help their clients simplify their cross-border finances and create long-term revenue streams that will keep their assets safe whether they live in Canada or the US.

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