You’ve worked hard, built a successful career in the United States, and accumulated enough savings to enjoy retirement.
But as retirement approaches, you may face a difficult question: Should you stay in the United States or move back to Canada?
For many Canadians living in the U.S., the decision is emotional. Family, friends, and familiar surroundings may feel like home. At the same time, lower healthcare costs and the exchange rate might make retirement in Canada seem financially attractive.
However, making the wrong financial assumptions could affect your retirement income for years to come.
Is It Cheaper to Retire in Canada or the United States?
In this video, we explore a hypothetical Canadian couple who have saved $2 million for retirement.
David and Susan are both 65, currently live in Raleigh, North Carolina, and are considering returning to London, Ontario.
With $120,000 in annual retirement income from U.S. Social Security, CPP, and retirement account withdrawals, they want to understand where their money will go further.
We compare three important expenses:
1. Cost of Living
How do housing expenses, property taxes, utilities, transportation, and everyday spending compare between North Carolina and Ontario?
We also examine how the USD/CAD exchange rate affects purchasing power.
2. Healthcare Expenses
Medicare can provide valuable coverage, but retirees still face premiums, supplemental insurance costs, and out-of-pocket expenses.
Ontario’s public healthcare system offers a different financial structure. But are the potential healthcare savings enough to justify moving?
3. Retirement Income Taxes
U.S. Social Security, CPP, and withdrawals from traditional retirement accounts can be taxed differently depending on where you establish residency.
In our hypothetical comparison, the couple’s estimated annual income taxes are $7,800 in North Carolina versus $22,000 in Ontario, expressed in U.S. dollars.
The result? Lower healthcare expenses in Canada don’t necessarily translate into a less expensive retirement.
Where Should You Spend Your Retirement?
When we combine living expenses, healthcare, and income taxes, our hypothetical couple would spend approximately $84,500 annually in North Carolina compared with $85,900 in Ontario.
That’s only a $1,400 annual difference.
For someone who has saved $2 million for retirement, the decision may ultimately be more about family, lifestyle, and personal preferences than the difference in annual expenses.
However, every situation is different. Retirement account balances, tax residency, healthcare eligibility, exchange rates, and long-term retirement goals can all change the outcome.
Watch the video here:
Simplify Your Cross-Border Retirement
At RetireMitten Financial, we specialize in helping Canadians living in the United States develop comprehensive retirement plans that coordinate financial decisions across both countries.
Whether you’re planning to remain in the U.S. or considering returning to Canada, our goal is to help you understand your options and make informed decisions about your retirement.
Schedule an introductory meeting:
Disclaimer
Investment advisory services are offered through RetireMitten Financial Planning, a registered investment adviser. Registration does not imply a certain level of skill or training. This video is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. The views expressed are those of RetireMitten Financial Planning and are subject to change without notice. This video is for educational purposes only and does not constitute personalized investment advice. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. Any testimonials or endorsements appearing in this video were given by individuals who may or may not be clients of the firm. For more information, please refer to our Form ADV and privacy policy available at https://retiremitten.com/.