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Should Canadians Retire to the U.S.?

Kimberley Fowler
By Kimberley FowlerNovember 8, 2016

For decades, financially affluent Canadian seniors have been spending their winters in the United States — popular destinations for Canadians 55+ include Arizona and Florida. Referred to as “snowbirds,” these Canadians drive or fly south as soon as the leaves start to change, then return in the spring.

But, many seniors are now considering whether or not retiring in the U.S. is the best option for them. Learn why.

Considerations Before Retirement

Although the U.S. has been a top destination for Canadians for many years, being a snowbird isn’t ideal for all seniors:

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  1. As Canadian seniors age, their yearly pilgrimage can become too physically taxing, causing them to have to abandon the social connections and support systems they’ve made in one of their two countries. Snowbirds in this scenario have a difficult choice, as they have to opt to stay permanently in either Canada or the U.S.
  2. Not every Canadian looking for a sunny destination wants to come back to Canada during the summer months.
  3. Some Canadians aren’t able to afford the costs of maintaining two homes (even if one is a mobile home or RV).

These considerations, alone or in combination, are causing many baby boomers to pause and consider whether permanently retiring in the U.S. may be a better option.

Should You Retire in the U.S.?

Retiring in the U.S. is possible for many Canadian baby boomers, but such a big move requires a lot of consideration, foresight and planning. Here are some important factors to consider:

Finances and Taxes

Tax laws for Canadians living in the U.S. are down right confusing and the rules that apply depend on unique circumstances including length of stay, (American) money earned during the stay, residency status and whether taxes are being filed in Canada.

In most cases, Canadians who are permanent residents of the U.S. normally only have to pay tax in the country they reside. However, Canadians who aren’t permanent residents but spend time in the country may have to pay taxes in both countries.

Generally speaking, when comparing taxes in the two countries Canadians pay more tax overall, which makes permanent residency an appealing option for Canadians thinking of retiring in the U.S. Last year, The Financial Post published a comprehensive article comparing financial considerations like retirement savings and taxes for Canadians and Americans. CBC News also has an informative article about financial and legal considerations for Canadian snowbirds.

It’s important to keep in mind, however, that the Internet is not the best source for information on financial, immigration and tax information because the rules are situationally specific. If you’re interested in retiring in the U.S., then it’s best to talk to your accountant, financial advisor and immigration lawyer.

Medical Costs

Most Canadians know that our universal system of health care isn’t universal enough to extend to Canadians living in the United States. In fact, there was a time when Canadians looking for a sunny U.S. destination in which to retire were simply ‘out of luck’ if they had a pre-existing health condition. However, challenges for Canadian seniors looking for medical insurance coverage in the U.S. changed several years ago with Obama’s Affordable Care Act, which created the Pre-Existing Condition Insurance Plan program.

“One of the biggest deterrents for Canadians going south [was] getting medical coverage that [was] reasonably priced,” Robert Keats, author of “The Border Guide” told the Globe and Mail. Now, “any Canadian who gets a proper visa to live in the U.S. can get health insurance, regardless of previous conditions. That’s an enormous leap because most people, when they get into their 60’s, they’ve got some kind of preexisting condition.”

Permanent Residency

However, it turns out that health insurance is just one of many hurdles that Canadians looking to retire in the U.S. have to overcome. Securing a proper visa to live in the U.S. (which is necessary to get health insurance through the pre-existing condition insurance plan) is not a simple process. This is why so many Canadians are “snowbirds” — spending six months a year in the United States (the maximum time Canadian citizens are allowed to stay in the United States without a visa).

Canadians who want to stay in the United States for longer than six months need to:

  • Become a permanent resident of the United States or
  • Obtain a green card

According to Michael Niren who is a member of the Law Society of Upper Canada, the Canadian Bar Association’s Citizenship and Immigration Section, there are ways Canadians can obtain permanent residency or a green card, but it’s not an easy process:

“For example, you could have a family member or spouse sponsor you to come to the United States as a permanent resident, or you could have a job in the U.S. while working on a work visa, eventually having your employer sponsor you,” Niren says in his blog. “But this can’t work for everyone, because not everyone is in that type of family or work situation.”

Another option for retiring Canadians is to obtain an investor visa. To do this, Canadians would need to use their savings to make an investment in the U.S.”

“These investor visas include the E2 investor visa and the E-B5 investor visas, which will provide the Canadian citizen with an avenue of remaining in the United States for longer,” Niren explains. “One of these visas is good for about five years, however it can be renewed before those five years are up. The other visa can result in permanent residency in the United States.”

Have you or a senior loved one made the decision to retire in the U.S.? What considerations went into your decision? Share your stories with us in the comments below.

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