American Residents Retiring in Canada

American residents choose to retire in Canada for a variety of reasons. First, Canada is generally known to be a liberal, peaceful country. Canada is also appealing because of its physical closeness to the US and its familiarity to US residents. However, American residents retiring in Canada do need to consider a variety of cross-border planning points before moving north of the border.

For example, American residents who want to retire in Canada are often concerned about their retirement income, unsure about whether a move to Canada is financially sound. For some retirees, Canada can be even more financially advantageous than the US. Though taxes tend to be higher in Canada than the US, the exchange rate typically favours the American dollar, offsetting the cost of potentially higher taxes. Performing a cash flow analysis is one way to ensure that retiring in Canada is feasible.

Canada is also attractive because of its low cost of health care. The private US health care system is notoriously expensive. The Canadian public health care system is far more affordable; Americans who retire in Canada can therefore benefit from the Canadian health care system.

Another threshold issue that many clients wonder about is immigration, especially as it relates to health care. Americans retiring in Canada want to ensure that they will have easy access to Canadian health care services. Other important questions concern whether or not it’s necessary to relinquish US citizenship or Green Card status once American retirees move to Canada.

Besides immigration, cross-border tax questions are also primary. Many Americans are familiar with the fact that the US taxes its citizens and permanent residents on their worldwide income, regardless of residency. American retirees who move to Canada want to make sure that they are not caught in any cross-border tax traps, particularly if they have US business holdings or a US investment portfolio. How to handle American retirement accounts such as 401(k)s and IRAs in the most tax-advantageous way is yet another consideration for American retirees moving to Canada.

Making the decision to retire in Canada necessitates careful pre-departure tax, estate, retirement, investment, and immigration planning. Keep reading for more information about these cross-border financial planning topics as they apply to Americans retiring in Canada. Please note that the topics covered below require detailed, comprehensive analysis before specific recommendations can be made to an individual client, which is the purpose of creating a cross-border financial plan prior to departure.