Low Canadian-Dollar ; lower expectations

[W2R]

I just checked a cost of living comparison calculator, here, and found that the COL here in New Orleans is just 53% of the COL in San Francisco. That isn't all housing. In fact everything they list except bowling and ground beef costs more in SF than it does here.

My point is that the value of the American dollar is very different depending on where you go in the US. Sure, the exchange rate is down for you, but how much you can buy with that American dollar probably depends a lot on your destination within the US.

I wouldn't let the exchange rate keep you from enjoying travels to the U.S. Maybe this might be a good year to visit the less costly states.

 

[Bamaman]

We often travel in Canada on vacation, and we just love the people. And we feel so bad that there is less parity with the U.S. Dollar.

I don't know how Canadians can retire with the high cost of living, including 15% sales taxes (Nova Scotia) and the cheapest beer @ $12.99 per six pack. We watch the HGTV home buying shows out of Toronto, and I honestly wouldn't be caught dead living in one of their $650K homes that needs completely rebuilding. But what really gets me is that nobody in Toronto ever wants to move to a different neighborhood--comfortable where they are.

I have a close friend (co-worker) that's a dual Canadian-U.S. citizen. When he retired recently, he took his U.S. pension and social security and moved from Illinois to Ottawa. I would think the currency conversion rate had something to do with his moving north.

 

[tmm99]

I have a close friend (co-worker) that's a dual Canadian-U.S. citizen. When he retired recently, he took his U.S. pension and social security and moved from Illinois to Ottawa. I would think the currency conversion rate had something to do with his moving north.

From what I read (Correct me if I am wrong - I just moved to Canada, plus I am not receiving SS), 85% of US social security benefits are taxed as regular earned income in Canada, and all taxable income from the US will be taxed accordingly as it's worth in Canadian$ (If you have $1USD income (via 401K, taxable pensions), it will be considered $1.30CAD (or whatever the exchange rate is) for tax purposes), and Canadian income taxes are generally higher than US taxes. I don't know which comes out cheaper overall. I hope it works great for your friend (since I am pretty much in the similar boat as he is...)

 

[tmm99]

Does anybody buy Barilla spaghetti? That cost $1 on sale in California. Where I live (about 1.5 hours drive from Toronto), I see Barilla spaghetti on sale here for $1CAD frequently. Today, I saw it on sale for $.84CAD. How do they do it? Prices of some items from the US are the same $ amount even now...... I heard Tesco in the UK is having difficulty keeping the prices down...

 

[Big_Hitter]

and the cheapest beer @ $12.99 per six pack.

well there goes my idea of a vacation in el norte

$13 gets a 30-rock of PBR or key light here

if I had to pay $13 a sixer I'd seriously consider home brewing

 

[brett]

$13.99?

Last week I paid $9.99 for a six pack in Calgary. That is about $7.30 USD.

Prices do vary by location. We drove though the northern states last summer. The savings we enjoyed on gas offset the higher food costs. Lodging was also less expensive than Ontario.

We are not planning any US vacations. Stopped in Hawaii for two days on our way back from Oz but the flight savings covered the damage. We simply look at other destinations. We want to go back to Hilton Head and the Carolinas but not now. Instead it will more advantageous for us to fly to Greece and the Turkish Med. coast. It could all change in a few years IF the price of oil increases.

Our taxes are definately higher. But, health insurance is part of the package. I suspect that the US cost of living varies considerably by location, just as the Canadian one does.

 

[Big_Hitter]

I suspect that the US cost of living varies considerably by location, just as the Canadian one does.

yep - huge difference for the cost of a pint in NYC versus the cost of a pint in Bunkie, LA

 

[kcowan]

We really lucked out with exchange rates. In 2003 when we were deciding where to snowbird, Mexico peso was 7.1 to the canuck buck. and COL was 50% of Vancouver. By 2007 when we bought, C$ was $1.065 US (RE is priced in USD). Now we get 15.3 pesos to the C$.

So we went from being able to survive on our pensions and stash in 2003 to being able to live large forever in 2017!

(Better to be lucky than smart!)

 

[Fermion]

So what ways are there to diversify into the Canadian dollar for those of us who want to spend significant time in Canada?

I see FXC as a exchange traded fund tracking the loonie but it has a fee of 0.40%. It was $100 a couple years ago and is $74 now. Maybe?

But you couldn't do much else with the money....well perhaps you could sell calls against it to gain some additional profit or at least offset the fee.

 

[brett]

Not certain, but perhaps you could open a bank account and a trading account. Buy/sell stock or funds on the TSX, cash out in CAD and transfer to your bank account.

 

[Danmar]

We often travel in Canada on vacation, and we just love the people. And we feel so bad that there is less parity with the U.S. Dollar.

I don't know how Canadians can retire with the high cost of living, including 15% sales taxes (Nova Scotia) and the cheapest beer @ $12.99 per six pack. We watch the HGTV home buying shows out of Toronto, and I honestly wouldn't be caught dead living in one of their $650K homes that needs completely rebuilding. But what really gets me is that nobody in Toronto ever wants to move to a different neighborhood--comfortable where they are.

I have a close friend (co-worker) that's a dual Canadian-U.S. citizen. When he retired recently, he took his U.S. pension and social security and moved from Illinois to Ottawa. I would think the currency conversion rate had something to do with his moving north.

Yes it can be more difficult being Canadian. On average we make less and pay more taxes. I am always amazed to hear how low the cost of living can be in parts of the US. Canadians are generally not as mobile as Americans and this is often abetted by our social welfare safety net that pays more generously in depressed areas. Oh well, we make do the best we can.

 

[marko]

Personally I wouldn't let the FX ever change my plans.

We lived in France during the time when euro was about E1.30 to the $1USD. Didn't really see it as a factor.

As DW says "the price is the price". Won't tell you what mom says.

 

[Ian S]

So what ways are there to diversify into the Canadian dollar for those of us who want to spend significant time in Canada?

I see FXC as a exchange traded fund tracking the loonie but it has a fee of 0.40%. It was $100 a couple years ago and is $74 now. Maybe?

But you couldn't do much else with the money....well perhaps you could sell calls against it to gain some additional profit or at least offset the fee.

Probably better to invest in some actual Canadian stocks. The "Big 5" Canadian banks are good candidates and are available on the New York stock exchange. They are listed in US$ and the dividends are converted to US$ but they would still be impacted by an increase in the CAN$. I have two of the banks in my portfolio and they have done very well over the years.

 

[brett]

We consider currency when making travel plans. We several USD Med cruises when CAD was high. Plus lots of US travel and US purchases. Very few now.

We have lots of places in our respective bucket lists. We work the top ones based on good travel offers, currency, hotel and transportation costs, etc.

The GPB is lower now and the euro is down from previous highs for us so this may be our fall trip if the stars align.

 

[timemoveson]

We often travel in Canada on vacation, and we just love the people. And we feel so bad that there is less parity with the U.S. Dollar.

I don't know how Canadians can retire with the high cost of living, including 15% sales taxes (Nova Scotia) and the cheapest beer @ $12.99 per six pack. We watch the HGTV home buying shows out of Toronto, and I honestly wouldn't be caught dead living in one of their $650K homes that needs completely rebuilding. But what really gets me is that nobody in Toronto ever wants to move to a different neighborhood--comfortable where they are.

I have a close friend (co-worker) that's a dual Canadian-U.S. citizen. When he retired recently, he took his U.S. pension and social security and moved from Illinois to Ottawa. I would think the currency conversion rate had something to do with his moving north.

This is an amusing thread for a Canadian in a specific demographic (i.e., near the top). The move in the dollar has been painful but we've been in much worse shape in prior years and it's actually still tolerable against everything major but USD. And, it could change back anytime for many reasons or no reason.

You'll need to grant me some sarcastic license about Toronto.

- I wouldn't live in a $650K Toronto home either; the average liveable home is about $1.4mm and those frequently get torn down too. Mine is just ok at about $1.6mm.
- We don't move from Toronto because it's...Toronto...and neighbourhoods are really important here.

 

[Meadbh]

I don't know how Canadians can retire with the high cost of living.

One word: healthcare.

 

[Huston55]

One word: healthcare.

Thank you!

 

[Sittinginthesun]

We often travel in Canada on vacation, and we just love the people. And we feel so bad that there is less parity with the U.S. Dollar.

I don't know how Canadians can retire with the high cost of living, including 15% sales taxes (Nova Scotia) and the cheapest beer @ $12.99 per six pack. We watch the HGTV home buying shows out of Toronto, and I honestly wouldn't be caught dead living in one of their $650K homes that needs completely rebuilding. But what really gets me is that nobody in Toronto ever wants to move to a different neighborhood--comfortable where they are.

I have a close friend (co-worker) that's a dual Canadian-U.S. citizen. When he retired recently, he took his U.S. pension and social security and moved from Illinois to Ottawa. I would think the currency conversion rate had something to do with his moving north.

I have a few choice comments to add as reply to this as a self-made multimillionaire Canadian but the mods wouldn't like them and I am a polite Canadian lol. Suffice to say life is good for my family, friends, employees and I don't know a single person unhappy to live in our country.

 

[Meadbh]

I have a few choice comments to add as reply to this as a self-made multimillionaire Canadian but the mods wouldn't like them and I am a polite Canadian lol. Suffice to say life is good for my family, friends, employees and I don't know a single person unhappy to live in our country.

+1
Holds tongue......

 

[W2R]

I have a few choice comments to add as reply to this as a self-made multimillionaire Canadian but the mods wouldn't like them and I am a polite Canadian lol. Suffice to say life is good for my family, friends, employees and I don't know a single person unhappy to live in our country.

Personally I really appreciate your efforts to remain a polite Canadian. Polite, civilized posts are pleasant to read, informative, and lessen the moderator team's workload.

I don't know any Canadians who are unhappy to be living in Canada, either. Well, I don't know many Canadians at all, but the few I do know enjoy living in Canada.

 

[tmm99]

I have a few choice comments to add as reply to this as a self-made multimillionaire Canadian but the mods wouldn't like them and I am a polite Canadian lol. Suffice to say life is good for my family, friends, employees and I don't know a single person unhappy to live in our country.

I didn't take the way you took banaman's post evidently. I used to live in e Silicon Valley and I never would have paid 1M for a tiny little hut with a tiny little backyard in my neighborhood either. I used to think people who paid that kind of money for a hut were crazy (although my friends would be making tons of money if they sold their houses now.) I moved from Colorado where housing was so much cheaper, so I felt bad that the only people who could afford to buy a house where I moved to in California were a handful of highly compensated people. And I took bamaman's comment as such. ) Just like everywhere else, the cost of living in some areas are higher than some other areas. Although I have noticed that alcohol as well as tobacco products are definitely more expensive than in the US. I don't drink or smoke but if I were a big drinker or a heavy smoker, I would need to plan to have a bigger budget for it.

Anyway, a couple of things that are of interest to me, is the current and future exchange rate, and how things are taxed differently in Canada from the U.S. I have noticed that I will be paying more in federal taxes in Canada. Social security benefits from the US is taxed more heavily (I have made adjustment for this in my FIDO RIP.) I no longer have to pay for Cobra or ACA though. Money wise, I am not sure which comes out better overall for me. This is going to be my first full year as a Canadian resident so I am kind of holding my breath. I may need to make adjustment to the withdrawal from my 401K...


Sent from my iPad using Early Retirement Forum

 

[6miths]

Studies that I have heard of suggest that total tax burden in Canada is not significantly different from the portions of the US that I would consider living in (except at high income levels). At any rate (pardon the pun), I don't think that taxes have a major impact on where the vast majority of people chose to live.

For those looking to convert USD to CAD or CAD to USD, one should Google Norbert's gambit. Basically, buying a stock which is inter-listed on the TSX and the NYSE (eg. Royal Bank) and journaling them over to the other exchange and selling them. Basically get the spot exchange rate minus the fee for two trades.

 

[brett]

Tax burdens vary significantly in Canada. When we moved to Alberta we moved from another province with an incremental income tax rate of 51 percent, a 13 percent combined sales tax, very high auto insurance and gas tax.

We moved to a province that had an incremental tax rate of 39 percent, sales tax of six percent, 30 percent lower insurance and gasoline costs. And no Government Health Care premiums.

This did make a substantial difference to the amount of money we saved(or avoided in tax) in the 14 years prior to retirement. Keep in mind things like stock options and capital gains are taxed at half the gain. No tax on capital gains from sale of homes, lottery winnings etc, forgiven loans. No gift tax.
Home are expensive only in certain cities/areas.

Nova Scotia has one of the highest combined tax rates in Canada. And it will go higher because of debt and demographics.

Notwithstanding the tax we are very fortunate to have accumulated a portfolio that will see us through retirement and enough to do the same for our two children when we pass. We travel extensively-at least twice per year. We cannot imagine living anywhere else. Well, perhaps Australia.

 

[NW-Bound]

And Nova Scotia has a per-capita income significantly below that of Alberta, which is the richest province if I recall correctly.

Any country will have some citizens who are not happy. I have read a few blogs, so I know.

I have lived in the US all my adult life. We love to travel, and have done so to visit many places, but do not live there to know what everyday life would be like. I am accustomed to being where I am, and I am sure most of the citizens of other places feel the same.

 

[brett]

Similar to the US, Canada has been undergoing some significant changes in our economy over the past few years. Governments have been slow to re-act to the changes.