Retiring In Canada

[Cut-Throat]

John Galt,

I don't worry about people coming here, as much as I worry about the jobs going there!

Actually immigrants would rather stay where they're at and have an Amercian company build a facility in their hometown.

China is now garnering most of the world's manufacturing jobs. Ironically, they probably have the 'most free' marketplace of all. Free to hire Children and Free to pay their workers pennies, Free to mistreat workers with terrible working conditions. Free to pollute their countries Air, Land and Water.

Then there is India where Amercian companies are building large service centers. If a job can be done over the Telephone like - Legal Services, Engineering and Computer Sciences - the job is at risk. They Pay about 1/10th of what US companies are paying. One of companies in town that publishes legal documents has just farmed out a bunch of work to Indian Lawyers. They are teaching them Amercian Law.

These are countries that have a 'Free Marketplace' They are pretty much free to do as they please. I'm not interested in relocating to one of these places though!

No, John I don't think you have to worry about immigrants coming here. They will be paying the Social Security that you are soon to receive.  And I'll bet you are only few generations away from immigrants from Europe.

 

[John Galt]

Hi Cut-Throat! Four quick points.

1. Companies going "offshore" are trying to make more money. As Martha used to say "It's a good thing!"
We once called it free enterprise.

2. We should avoid telling other countries how to
run their own ship all the time. Our track record is not
all that pure.

3. While it is true that my family is Scotch-Irish, as far
as I know none of my relatives broke any laws to come here.

4. If the USA would stick to the purposes our founders
envisioned (and got out of social engineering, for example) there would be plenty of money to pay for social security.

When I used to vote, I always voted Republican.
Now, I think they are just as nutty as the Democrats.

John Galt

 

[fire5soon]

4.  If the USA would stick to the purposes our founders
envisioned (and got out of social engineering, for example)  there would be plenty of money to pay for social security.

When I used to vote, I always voted Republican.
Now, I think they are just as nutty as the Democrats.

John Galt

Right on, John!

-Jay

 

[Cut-Throat]

If the USA would stick to the purposes our founders
envisioned (and got out of social engineering, for example)

John Galt,

Here I disagree strongly.

I personally find Child Labor and Slavery horrible.

Some of our founders had slaves, which is terrible! - Just because they founded this country did not make them faultless. Luckily, men with more honor and compassion came after them to rectify the wrongs of our society.

Had your life not been subjected to what you call 'social engineering' you would not have lived the cushy life you did. It may be to your advantage to deny the rights you had for others - Just recognize that you had those privledges when you were growing up as well as the cleaner air you breath today to register your complaints.

 

[fire5soon]

I personally find Child Labor and Slavery horrible.

As do I, but outlawing slavory does not cost a thing. Social Security & Medicare on the other hand...

This is what I believe John is talking about when he mentions social engineering.

-Jay

 

[sgeeeee]

As do I, but outlawing slavory does not cost a thing.  Social Security & Medicare on the other hand...

I think most of the large plantation owners in the South right after the Civil War might take a huge execption to the first part of this statement. Whole towns disappeared after outlawing slavery because they were no longer financially viable.

As far as the cost of any social program goes, you can't judge them only by looking at the expense. Just like any other investment, you need to look at a cost-benefit analysis. I notice that Social Security and Medicare are two of the most popular government programs around for the beneficiaries. Their vote counts too. More than 48% of Americans over 65 depend on social security benefits to maintain a lifestyle that is above the poverty level. What is the cost of having this many elderly people living in poverty?

 

[wabmester]

What is the cost of having this many elderly people living in poverty?

Here's a solution that should make both sides of this argument happy: kick all of the immigrants out of the country and give their vacated jobs to the elderly.

Hey, this social engineering stuff is kinda fun!

 

[haha]

Free markets are crap unless they embrace free movement of labor - ie the whole loaf not just half.

This might be true if all a nation were is an economy. But it is more, it is a culture. Less theory and more attention to what has happened in the last 40 years as a result of labor mobility would be helpful. France, Germany, Sweden, UK all are having severe crime and other social problems as a result of labor mobility from respectively North Africa, Turkey, Turkey, Pakistan and Jamaica. France in particular has a muslim minority almost as large as our African- American minority here. All these countries have found that they have a tiger by the tail. Most of them are doing what we have done, moving toward "affirmitive action". They use none of the bogus theories that we put forward about slavery, etc. Just plain old "what the hell else are we going to do?" If they don't give these groups a permanent subsidy of one kind or another, they will give themselves a subsidy via crime and destruction of the host nation's culture.

Another dificulty with unfettered labor mobility is that it totally falls down in modern welfare societies. Which the US is, by the way. All a pregnant Mexican has to do is somehow get across the border, and she and her family will have their anchor baby, compliments of MediCal. Is that fair to some family already living here, maybe some members have served in the arm forces of our country, but unfortunately they get no medical insurance at their jobs?

Good luck USA competing with China. There the poor people are smart, and no one ever heard of affirmative action.

Mikey

 

[John Galt]

Hi Cut-Throat!

If you think men of honor have "rectified
the wrongs" (I'm not talking about slavery here), I have
to wonder what planet you are living on. I know everything wasn't heavenly back in
1800, but it surely looks good from where I stand, and I see damn few men of honor any more, at least in politics. You are talking to a student of history here
Cut-Throat. You don't need to be a genius to see where
we are headed.

BTW, my life has not been all that "cushy".

John Galt

 

[fire5soon]

As far as the cost of any social program goes, you can't judge them only by looking at the expense.  Just like any other investment, you need to look at a cost-benefit analysis.  I notice that Social Security and Medicare are two of the most popular government programs around for the beneficiaries.  Their vote counts too.  More than 48% of Americans over 65 depend on social security benefits to maintain a lifestyle that is above the poverty level.  What is the cost of having this many elderly people living in poverty?

SS has been around for roughly 70 years. People surely were able to survive & provide for themselves before. Many of us on this board discuss retiring early because we are responsible enough to realize we need to provide for ourselves and are willing to work for it. What I don't like is having to pay for someone else's retirement because they were not responsible enough to provide it for themselves.

Also, the reason SS & Medicare are so popular is basically it is a handout. Alexander Tyler said over 100 years ago "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. " The most popular government program will always be the one where the majority can extract the most money from the wealthiest few. SS & Medicare scare the heck out of me because I truly believe it can potentially be a major cause of America's downfall.

Ironically I'm usually a very optimistic person.

-Jay

 

[BunsGettingFirm]

Only the USA allows itself to be a dump for  the uneducated, old, and sick excess population of practically any other country. My neighborhood is full of very old Russians.  Almost none of them speak English. I never see them with adult children, so I wonder who is supporting them? I would guess that I probably am, but I can't be sure.

The only positive I can see is that the quality of smoked herring and cultured milk products has gone way up. And the young Russian women are totally yummy. Quite different from the image I remember from my boyhood in the 50s. Olga, the 185 pound shotputter is out. Natasha the 115 pound beautifully dressed red head is in.

Overall though is seems that the American middle class are pack animals for rest of the the world.

Mikey

Mikey, where do you live? I'd like to see more red heads named Natasha or Sveltana.

I would think that with the amout of money that retiree Americans take to Canada, Mexico, or Costa Rica, these countries would welcome them with open arms because the money that these retirees bring are free money. The money was made with the peace provided by the U.S. military, the infrastructure funded by U.S. tax dollars, and the natural resources harnessed by U.S. businesses. These destination countries are basically getting free money for providing some health care. I would think that it's in their best interest for these countries to welcome U.S. retirees.

This is why I'm still confused why retiree citizenship was once available in North and Central American countries only to be revoked relatively recently.

 

[BunsGettingFirm]

The opposite.  You can live income tax free for 5 years if you have income from abroad.  If you are moving there and not a current Citizen. However,  I am a Citizen of Canada, USA and European Community so there will not be an issue. (Tri Citizenship, Just call me "00-Ian")

Shok, I asked earlier this question: How did you manage to become citizens of the U.S., Canada, and the E.U.?

 

[Hyperborea]

Shok, I asked earlier this question: How did you manage to become citizens of the U.S., Canada, and the E.U.?

I'm not Shok but it's not that hard to do. I'm currently a dual Canadian/EU citizen. I was born in Canada and my parents were immigrants from an EU country. That gave me dual citizenship at birth. It would be entirely possible for me to collect US citizenship as I currently work in the US and will soon have "green card" status. For a potential FIREee though I think getting US citizenship is big negative. One of the biggest problems is the lifetime US claim on a percentage of your income. Most other countries in the world only tax on residency and NOT citizenship.

Hyperborea

 

[Cut-Throat]

You are talking to a student of history here
Cut-Throat. You don't need to be a genius to see where
we are headed.

BTW, my life has not been all that "cushy".

John Galt,

If you don't think Women's Rights or Civil rights were a good thing and fought for by men of honor, I guess I can see why you don't like the way the country is going.

I guess you wanted things the way they were - that favored white men only!

Are you sure 'you are a student of history' or just blindly supporting your own predjudiced beliefs?

BTW - My life and your life were very cushy compared to the average Chinese and Indian now working today in an overseas Manufacturing plant.

 

[ShokWaveRider]

Sorry I did not Respond to this earlier.

I am a Born UK Citizen (Hence EU Passport) I became a Canadian Citizen (Dual OK) then I became an American Citizen, They did not ask me to renounce my UK (Birth) Citizenship. I think they used to some time ago though. I did not tell them about my Canadian Citizenship.

I do not think their policy is to remove ones birth citizenship. IT would be hard to do. They could confescate the passport but I could go back to the UK with my Birth cert and get a new one.

SWR

 

[Hyperborea]

I do not think their policy is to remove ones birth citizenship. IT would be hard to do.  They could confescate the passport but I could go back to the UK with my Birth cert and get a new one.

IIRC the oath that you take when you become an American citizen has words of "I hereby declare, on oath, that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty, of whom or of which I have heretofore been a subject and citizen."

Other countries are under no obligation to take that as any indication that you wish to give up citizenship in their country and most ignore it. Some countries (China) don't allow you to ever give up citizenship. The US is trending that way too with their expatriation tax laws. Not exactly forbidding it but trying to make it very expensive.

Hyperborea

 

[unclemick]

Hey - This is a lot more fun than picking on Canada during winter - thermometer jokes aside.

Back to my top down theory on 'free markets' , I'm still waiting for some of the 100+ governments of the world to fill my mailbox with enticements to retire abroad along side the investment junk I'm getting.

Job arbitrage, immigration, SS problems are faced by all the G-7 countries to varying degrees. My grand theory aside - we get to depend on that wonderful group - politicians to solve the practical aspects in each country. No engineering, simulation models, spreadsheets, benchmarking, - just politicians.

 

[ShokWaveRider]

IIRC the oath that you take when you become an American citizen has words of "I hereby declare, on oath, that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty, of whom or of which I have heretofore been a subject and citizen."

Hyperborea

WRONG! When I did it you simple pledge allegence to the flag and Americ from a PRIMARY perspective. RENOUNCE was never mentioned. I did it 3 years ago.

Ian

 

[unclemick]

Dumb question? Is Canada getting more expensive as in noticible prices with the falling dollar in the news. Do currency concerns affect portfolio strategy as much as taxes and residency/citizenship.

 

[Hyperborea]

Dumb question? Is Canada getting more expensive as in noticible prices with the falling dollar in the news.

With the falling US dollar and the climbing Canadian dollar imports into Canada have gotten cheaper. It is more expensive now than it was two years ago to take your US dollar and spend it anywhere else in the world.

Do currency concerns affect portfolio strategy as much as taxes and residency/citizenship.

Currency concerns are definitely important if you are going to be travelling in retirement and even more so if you want to be spending significant amounts of time travelling (perpetual traveller). If you are mostly living in one country then your 5 year fixed income buffer (FIB) should at the very least be in that currency. If you split between two countries (e.g. summer in the US and the other summer in NZ) then you would probably want to split your buffer between the countries.

With plans to spend a good number of the first years (4 to n) of retirement travelling I am not sure how I want to allocate my FIB between currencies. If I was to retire right now I would probably consider a 50/50 split between US dollars and Euros for the CDs.

For most Americans there really is no taxation dilemma because there is very little in the way of choice. You are tied to American taxes for life. For citizens of other countries there are quite legal ways to change your tax residence and lower your taxes. For example, when I retire I may setup Thai tax residence and so using US/Thai tax treaty pull my IRA (and 401k rollover) out at a 0% US tax rate and a 0% Thai tax rate. The only thing I will owe is the 10% penalty the US for being under 59.5.

Hyperborea

 

[ShokWaveRider]

For example, when I retire I may setup Thai tax residence and so using US/Thai tax treaty pull my IRA (and 401k rollover) out at a 0% US tax rate and a 0% Thai tax rate. The only thing I will owe is the 10% penalty the US for being under 59.5.

Hyperborea

Are you Positive this holds true? I think that as the IRA/401k moneys were earned in the US, and Taxes were deferred in the US. Ergo, Taxes are payable in the US regardless. I think you will find IRAs etc are a different beast in the overseas tax strategy. I could be wrong.

SWR

 

[Hyperborea]

WRONG!  When I did it you simple pledge allegence to the flag and Americ from a PRIMARY perspective. RENOUNCE was never mentioned.  I did it 3 years ago.

Ian

If you check out the USCIS (née BCIS née INS) web page you will find the oath includes exactly the text as I posted above about renouncing allegiances.

http://uscis.gov/graphics/services/natz/oath.htm

Hyperborea

 

[Hyperborea]

Are you Positive this holds true? I think that as the IRA/401k moneys were earned in the US, and Taxes were deferred in the US.  Ergo, Taxes are payable in the US regardless.  I think you will find IRAs etc are a different beast in the overseas tax strategy. I could be wrong.

SWR

Yes, I'm absolutely positive that this holds true.  If you check out IRS publication 901 (http://www.irs.gov/app/scripts/redirectPDF.jsp?dest=/pub/irs-pdf/p901.pdf) for an overview of the tax treaties you will find that the taxation levels are given for "pensions and annuities" under which IRAs fall.  That taxation level is the default taxation amount and is also the withholding amount.  If you are over withheld by the default amount then you can file a 1040NR to get the extra back.  This amount withheld can be applied as a foreign tax credit if applicable in the country your are residing in.  The default and withholding amount on IRAs (part of the "pensions and annuities" category) is 0% for Thai tax residents.

Similar principles hold to things like equities.  After I leave the US and cease to be a US tax resident then I can sell my stocks and will owe taxes on none of the gains to the US.

The US has an expatriation tax that they hit long term permanent residents (green card holders) and citizens with if they try to stop being long term permanent residents or citizens.  I will be retired and have left the US long before I fall under the purview of these laws.
http://www.irs.gov/businesses/small/international/article/0,,id=97245,00.html

Hyperborea

 

[ShokWaveRider]

Re:  Retiring In Canada

Yes, I'm absolutely positive that this holds true. If you check out IRS publication 901 (http://www.irs.gov/app/scripts/redirectPDF.jsp?dest=/pub/irs-pdf/p901.pdf) for an overview of the tax treaties you will find that the taxation levels are given for "pensions and annuities" under which IRAs fall. That taxation level is the default taxation amount and is also the withholding amount. If you are over withheld by the default amount then you can file a 1040NR to get the extra back. This amount withheld can be applied as a foreign tax credit if applicable in the country your are residing in. The default and withholding amount on IRAs (part of the "pensions and annuities" category) is 0% for Thai tax residents.

Hyperborea

The Publication talks about pensions from other countrys not your 401k earned in the USA. Where did you read this?

SWR

About the Renunciation. All I can say is that I did not have to do it 3 years ago. In fact I remember them saying that they do not ask you to.

 

[Hyperborea]

Re:  Retiring In Canada

The Publication talks about pensions from other countrys not your 401k earned in the USA.  Where did you read this?

Ok, look at IRS publication 901 to which I posted the link above. Look at Table 1 (pgs. 32 & 33). The table lists the US tax rates for various types of US sourced income for payees of various tax residences. A payee is someone to whom money is paid.

If you wish more than the summaries of the tax treaties provided by this document then I recommend that you go directly to the text of the tax treaties that the US has with various countries. These can be found at http://www.irs.gov/businesses/corporations/article/0,,id=96739,00.html

For the Thai example that I gave earlier look at Article 20 of the treaty which states that "pensions and similar annuities" are taxed only in the country of residence (i.e. the US takes 0% tax). "Pensions and annuities" includes IRAs as explained in the even more detailed technical explanation of the treaty also at the above link (you can find this on pg. 63 of that document).

Hyperborea