Dual citizen: Is it better to retire in Canada or the US

[bondi688]

Dual citizen: Is it better to retire in Canada or the US?

I was asked by a friend, who is a dual citizen of both Canada and the US, who is currently living in the US, whether I think it is better to retire in Canada or the US. He is eligible for full social security in the US and has a small amount in addition coming in from the Canada Pension Plan. He has a RRSP (equivalent to an IRA) in Canada, but most of the IRA money is from him working in the US. He is not sure whether he'll get Old Age Security from Canada if he go back to Canada and retire there, but it would amount to less than $200 a month anyway. He is renting and has no housing to tip the scale. Family tie also does not play in the decision. I said I do not know, being not too familiar with Canada other than having some visits there, and found her to be a nice place to live. I told him I can refer his question to this board. I had seen some posters from Canada, and there were also some ex-pats. So, aside from social considerations, what do you think from a pure financial, taxation or logistic perspective? Are there other dual citizens who had made a choice? If they did, can they expand on the pros and cons?

 

[bondi688]

I did a search and there was some previous discussions on dual citizenship. I'll point him to the threads. But any further thoughts probably will be appreciated.

 

[MichaelB]

If your friend is a dual citizen and only rents, why does he need to choose one or even stay in only one place?

 

[pb4uski]

US, Canada is too flippin cold.

 

[Koogie]

Try looking at or asking over at the Financial Webring Forum. It is like this board but for Canadians. Lots of smart people there and many spend a lot of time in the US so are likely more qualified to answer.

 

[anethum]

One obvious consideration is health care. While each province provides coverage, I would imagine that there is a residency requirement before coverage takes effect, even for a citizen returning to Canada. One of the questions on the following faq addresses this:

Canada Health Act - Frequently Asked Questions

 

[nun]

The main reason to choose Canada would be the lower cost of healthcare. That's the same reason I'll probably ER back to the UK, the line item for health insurance/costs simply disappears from my budget. I'm immediately $6k better off in the UK compared to the US. Also my property taxes and income/capital gains taxes will be less in the UK than the federal and state taxes I'd pay. The big hit in the UK is VAT at 20% and the cost of gas.

 

[Letj]

The main reason to choose Canada would be the lower cost of healthcare. That's the same reason I'll probably ER back to the UK, the line item for health insurance/costs simply disappears from my budget. I'm immediately $6k better off in the UK compared to the US. Also my property taxes and income/capital gains taxes will be less in the UK than the federal and state taxes I'd pay. The big hit in the UK is VAT at 20% and the cost of gas.

And food and everthing else. The 6K in savings would be more than offset by a much much higher cost of living.

 

[nun]

And food and everthing else. The 6K in savings would be more than offset by a much much higher cost of living.

If you are talking about London I would agree, but I'll be moving from an expensive area of the US to an inexpensive area of the UK and expect to see my living expenses fall.

 

[Alan]

And food and everthing else. The 6K in savings would be more than offset by a much much higher cost of living.

Not at all, depending on where you live. We are considering living mostly in the UK, spending 5 months of the year in the USA.

In 2011 we lived in a small town (pop 25,000) in N. Yorks and I kept a detailed log of how much it cost. Certain foods that we like to eat, like artisan bread, were actually cheaper in the UK. (The bread was $1.50 compared to $3.50 here).

A few days ago I just did a budget for what it would cost to maintain our place here in Texas while renting a permanent place in the town we want, and included the costs of running a car plus $8k/year air fares and we can expect to be paying about $20k/year extra. Added costs to when we lived there in 2011 would include a car although we would have free bus passes so would use the car infrequently. I was pleasantly surprised to see that the road tax for the sort of car we'd need, sub-compact Ford Fiesta diesel cost $0/year and the larger, Ford Focus diesel costs $36/year.

 

[Texas Proud]

US, Canada is too flippin cold.

+1

 

[Alan]

US, Canada is too flippin cold.

+1

If he could afford it then snow-birding would be a good option but he'd need to be sure on the tax issues, so take a good look at those dual citizen threads.

 

[nun]

Not at all, depending on where you live. We are considering living mostly in the UK, spending 5 months of the year in the USA.

In 2011 we lived in a small town (pop 25,000) in N. Yorks and I kept a detailed log of how much it cost. Certain foods that we like to eat, like artisan bread, were actually cheaper in the UK. (The bread was $1.50 compared to $3.50 here).

mmmm I wonder where that could have been. I've also done a detailed cost comparison between New England and North Yorkshire and the cost of living is less in North Yorks. Food is generally less expensive in North Yorks as are utilities. As an example I pay $110/month for cable and internet in the US, in the UK a similar service is $70/month. Having a car is generally far more expensive in the UK as is train travel, so there are pluses and minuses.

Of course Alan the biggest reason to go to N. Yorks is easy access to warm Petches pork pies and big squares of black pudding!

 

[nun]

+1

If he could afford it then snow-birding would be a good option but he'd need to be sure on the tax issues, so take a good look at those dual citizen threads.

yes you'd want to keep Canadian residency for the health benefits too.

 

[Koogie]

Like the UK, Canada has higher costs for consumer goods and a lot of groceries and restaurant meals than the US. The taxes can be eye watering too.
However, unlike the US, a lot of the tax burden is oriented toward consumption taxes (HST/GST) and user fees. So, consume less and you pay less tax. It's a concept I'm all for, frankly.

However, much like the people on here that feel the need to point out how every question is to "simple" and doesn't take into account every one of a million variables, the OP has asked a pretty broad question too. His friends income level, type of income, relative need for healthcare, etc.. would all have to be taken into account.

By the way.... I'd rather be a little cold once in a while than live through the hell of a 6 month Texas "summer" !!

 

[fh2000]

mmmm I wonder where that could have been. I've also done a detailed cost comparison between New England and North Yorkshire and the cost of living is less in North Yorks. Food is generally less expensive in North Yorks as are utilities. As an example I pay $110/month for cable and internet in the US, in the UK a similar service is $70/month. Having a car is generally far more expensive in the UK as is train travel, so there are pluses and minuses.

Of course Alan the biggest reason to go to N. Yorks is easy access to warm Petches pork pies and big squares of black pudding!

Nun, and Alan,

I assume you both will keep US Citizenship, therefore required to purchase HI after ACA. Will you purchase high deductible, lower premium plan then?

 

[nun]

Nun, and Alan,

I assume you both will keep US Citizenship, therefore required to purchase HI after ACA. Will you purchase high deductible, lower premium plan then?

There's no requirement for US expats to buy health insurance, in fact as non-US residents they are excluded from all the plans. If they have a high enough income they will have to pay the associated tax though.

 

[bondi688]

Alan and Nun
It is interesting that you brought up Health Care. Do you plan to get future health care in the US or the UK? You hear about horror stories about NHS and long wait for elective procedures in Canada (propaganda?), and you guys are living in medical meccas in the US (Houston and Boston)

 

[Alan]

Nun, and Alan,

I assume you both will keep US Citizenship, therefore required to purchase HI after ACA. Will you purchase high deductible, lower premium plan then?

I have retiree insurance from my US ex-employer and plan on keeping it as we'll be spending 5 months a year here. That insurance also covers me in the UK for elective surgery and there is a participating private hospital just 10 miles from where we plan to live. We'll certainly use the NHS for primary care.

 

[Alan]

Alan and Nun
It is interesting that you brought up Health Care. Do you plan to get future health care in the US or the UK? You hear about horror stories about NHS and long wait for elective procedures in Canada (propaganda?), and you guys are living in medical meccas in the US (Houston and Boston)

See my post above regarding this.


We have plenty of friends and relatives in the town and close by, so we know how it is and none have any horror stories, in fact just the opposite. In the last few years our good friend, at 63, found that he was out of breath easily so went to the Doc who referred him. Within 6 months he was the proud owner of a new heart valve, and doing just great almost 8 years later. My sister, in her late 30's 3 years ago, was found to have cancer after a routine pap smear. Within 6 weeks she had had 2 procedures to remove all the cancerous tissue, and was just recently moved to an annual check-up since she is still clear.



Across the country my wife's niece, in her mid-20's, had both kidneys fail (she has lots of health issues following a near fatal car accident some years earlier). Once she was stabilized, on dialysis and blood chemistry within limits she was put on the donor list. 5 weeks later she got a call at 4am, surgery later that day and she had the transplant as the kidney was a perfect match. That happened 2 or 3 months ago, just before Christmas.


There are always issues but personal experience leaves us confident that we will do just fine with the NHS, plus our private HI.

 

[nun]

The NHS is going through a tough time because of funding and politics. But it is the health insurance/service of choice for the vast majority of people in the UK and it gives excellent care and service. Only 1.5% of people in the UK buy their own private health insurance, another 10% get it as work benefit. My mother is 88 and gets excellent care for her diabetes with in home visits from the doctor. She had to wait 2 months for recent cataract surgery, but had laser treatment on some diabetes induce retinal bleeding within a couple of days of diagnosis because it was urgent. Total out of pocket cost to her was zero. The hospital even refunded the cost of a cab to take her home.

I will be very happy to get similar care if/when I go back to the UK. The bigger issue for US expats with foreign health coverage is whether to pay Medicare premiums when they turn 65 in case they ever move back to the US.

 

[nun]

You hear about horror stories about NHS and long wait for elective procedures in Canada (propaganda?), and you guys are living in medical meccas in the US (Houston and Boston)

Yes those stories are mostly propaganda. There are issues with the NHS and politicians undercutting the service has caused a lot of trouble, but that happens everywhere, not least in the US with some of the policies of the private insurers. In the UK people fixate on how many people in the US don't have insurance and pre-existing conditions.

Boston is a mecca for health care, but it's also very expensive, but MA health reform is doing something to control the costs. If I was to ER tomorrow I could buy a 2k/4k plan through the state's website for $400-$500/month. So I have a line item for $6k in premiums and $4k annual max out of pocket costs. That $4k hopefully won't be a regular cost, but even with out it the $0 out of pocket cost of the NHS looks pretty good. That goes double given that my tax burden would be less in the UK and even with a 20% VAT consumption tax on good and services my expenses are less in the UK because I'm frugal and don't spend a lot on consumer goods and cars etc.

 

[Original Wally]

US, Canada is too flippin cold.

+1,000

I am a California boy, and "cold" is below 70. Above zero.

 

[Original Wally]

If he could afford it then snow-birding would be a good option...

Alan - right after retirement we spent a good month in AZ. You can't swing a dead cat there without whacking a Canadian. Seriously, probably 1/2+ of the motorhomes and other big rigs were from Canada. AND a sizable portion of the others were from "South Canada" aka North and South Dakota. Talked to a number of folks: They have it all dialed in. Insurance, taxes, everything. They move with the seasons and are very happy and content.

I would recommend that the OP's friend check out some of the RV sites. That seems to be the most mobile group for Canadians wintering south of the border.

 

[Alan]

Alan - right after retirement we spent a good month in AZ. You can't swing a dead cat there without whacking a Canadian. Seriously, probably 1/2+ of the motorhomes and other big rigs were from Canada. AND a sizable portion of the others were from "South Canada" aka North and South Dakota. Talked to a number of folks: They have it all dialed in. Insurance, taxes, everything. They move with the seasons and are very happy and content.

I would recommend that the OP's friend check out some of the RV sites. That seems to be the most mobile group for Canadians wintering south of the border.

This last year we spent 5 months touring in Northern USA (mostly Pacific NW) to escape the Texas summer and even then we did meet a lnumber of Canadians, so I can well believe it for the winter months