Canada is a pretty nice place. It might be your private paradise. We live in a country that is relatively clean, safe, beautiful, and politically stable, although some may dispute this. The weather, however, can be a bit depressing during the winter months and not all of us live near beaches. I, personally, hate shoveling snow and scraping car windows. Although I ski, that is not enough to keep me looking at gray skies all winter. Even Kelowna, that has one of the best climates in Canada, can initiate some level of Seasonal Affective Disorder in many of us. Some may, therefore, seek the exotic and would love to live in a foreign land.
A lot of the Boomers head south for the winter when the first snow flies. Everyone is aware of the Snowbirds…..those lucky Canadians who spent most of the winter months in warmer climates. Such a situation is likely the best of both worlds. You still retain your Canadian citizenship while avoiding the Canadian winter.
There is also a certain population that have moved permanently to somewhere nice and sunny…..where the pace of life is slower and the quality higher. At present, there are approximately 2.6 million Canadians, about 9% of the population, who are currently living overseas and classified as expatriates, or expats for short.
Maybe, if you’re worried that you’ll outlive your money, the cost of living in many foreign countries is much lower than that in the U.S. or Canada. That means your retirement funds can last longer.
However, choosing a place to retire is more than just finding an area with less expensive living costs, lower taxes, great weather and fun things to do. One must think of how you want to live with consideration to available services, and the livability of various areas. Separate the romance from the realities.
Becoming a legal resident of a foreign country isn’t always an easy process. There are a number of things to consider. Planning a move abroad is a significant undertaking that requires a great deal of thoughtful consideration. Once you have finalized a move overseas and started to put everything in place that you will need for a new life abroad, you should momentarily divert your attention away from the exciting new life that awaits and concentrate on your current life. There will be a significant amount of organizational and administrative tasks that you will need to carry out in order to fully tie up any existing commitments before you start afresh elsewhere. The last thing you want to do is to arrive in a new country with a large number of issues outstanding from your previous life. For this reason, planning your relocation is crucial.
Giving up Your Canadian Residency
When moving permanently to another country, you must sever your ties with Canada in order to avoid being deemed a resident of Canada for tax purposes. The most important factor is whether or not you maintain residential ties with Canada. You must:
- Sell your principal residence .
- Take all your valuable personal possessions out of Canada.
- Terminate Canadian bank accounts, investment accounts, credit cards, and safe deposit boxes.
- Give up your provincial driver’s license and health care card.
- File a Canadian exit return and pay departure taxes. This includes deemed disposition of certain assets.
- Plan to not return to Canada for at least two years after leaving.
- Establish residential ties in the new country.
Some things to consider before you leave:
- Being able to speak the local language may be important in dealing with local people. Learning the language of your destination country may assist your transition.
- Some countries are more tax friendly than others. Find out if your destination country has a tax treaty with Canada?
- Family: How can you best prepare your family for the move abroad?
- Appropriate management of your finances will be critical to ensuring that you can enjoy your new life abroad without leaving a mess behind.
- Government benefits – CPP/QPP/OAS benefits will continue to be paid without any residency requirements.
- Depending on the tax treaty in effect, withholding tax may apply to these payments, as well as any employee pensions or annuity payments. The normal rate is 25%. Get a financial advisor experienced in this area.
Considering Your Destination Country:
- Cost of living – One of the biggest, and most important concerns for many expatriates when choosing where in the world to live is the cost of living. Many people are concerned about how the new location will compare to the location that they currently reside.
- Healthcare – The quality of healthcare available in a destination is always a concern. Public healthcare may not always be available to expats within many countries and it is therefore important that you seek any information available specific to any country you are considering. If you or one of your family members has a serious health condition, healthcare can outweigh all of other criteria in your decision. Some countries offer universal health care and some do not. Some allow non-citizens to participate in the universal system. Some do not. Also, in some countries, the standard of health care is not as high as in other countries. This deficiency in the standard of care could apply in general, or it could apply to localized areas of the population.
- Safety – A further significant consideration of any expatriate considering a move abroad is safety and, in particular, the levels of crime in a country to which you are considering relocating. You should also consider the political stability of the country and the overall culture. Crime figures can be accessed at the following website: NationMaster – World Statistics, Country Comparisons.
- Climate: If you are seriously considering relocating to a new country then it is crucial that you understand what the climate in that location is like. On the website World Weather and Climate Information you will find details of the weather conditions and patterns in most countries around the world and cities therein.
- Buying property – Check local property laws. Not all countries allow expatriates to buy property, and some impose restrictions. Inheritance taxes might apply to real estate in a foreign country. Consult with a local real estate lawyer rather than relying on the assurances of real estate agents.
- Citizenship regulations – Some countries require immigrants to take out citizenship in order to live full-time and/or own property. While many people are prepared to give up Canadian residency status, few want to relinquish their Canadian citizenship.
- Infrastructure. Do you need a car or is the bus system up to scratch? And these days the availability of fast, reliable Internet is as important.
- Fitting In. Low costs and cheap real estate may be well and good, but you need to feel at home. How easy it is for expats to integrate into each country? Do the locals speak good English or do you need to speak the local language? Are the locals welcoming and friendly toward expats, and is there an existing expat community with lots of groups and clubs to join? I probably wouldn’t look at moving to Syria.
- Entertainment and Amenities. If you have nothing to do in a destination, you’re going to get bored pretty quickly. For some folks a mountainside home in rural Costa Rica is heaven, while other people want the bright lights and the option of taking in a show. Assess a destination’s indoor and outdoor entertainment potential. Is it easy to see movies in English? Are there many concerts or cultural events available? What kind of outdoor activities are made possible by the climate and terrain?
Choosing where in the world to live can be very difficult. As a potential expatriate you may already know where you are relocating to or could have the luxury of being able to choose where in the world to live. You may have found your little corner of paradise. International Living is a website dedicated to helping you relocate abroad. Below is a list of ten locations outlined by International Living that are potential considerations.
It might not seem the world’s top retirement haven, but the editors at International Living say the Republic of Ecuador is the best place in the world to retire to. The cost of living is low and real estate is cheap. Some think this country affords expats the chance to live on the fraction of the cost of living in Canada without sacrificing any quality of life. A couple watching their spending here can live well on $800 a month. You can also get by speaking English in parts of Ecuador. Plus, there are some expat communities already established. Retirement benefits, including 50% off transportation, utility bills and tickets for cultural and sporting events, are generous. Health care is inexpensive as well, all expats are able to participate in the Ecuador Social Security Medical Program for a premium of $57 a month.
Panama has the best retiree benefits according to International Living’s research. The southern-most country of Central American has an organized program of discounts and perks called the “pensionado.” The program is open to foreigners and there’s no minimum age requirement. You get 20% off any professional services used in Panama; 50% off for movies, theaters and sporting events; a 30% discount on public transport; 25% off the price of food eaten in a sit down restaurant; 15% off in fast food joints; 15% off in hospitals and private clinics; 25% domestic flights on COPA, and the list goes on.
Panama City is also among the most exciting retirement havens. As with most countries on this list, the cost of living is cheap in Panama: You need only $1,500 to $2,000 a month to fund your living expenses in a near-perfect climate. You can buy a beach-front condo for $180,000, or find a rental for $450 a month.
Mexico offers what International Living describes as best-value real estate. You can find a nice home for $167,000 in places like Tulum, on the country’s Caribbean coast. You can get by speaking English in many parts of the country and it’s easy to integrate into Mexico. For instance, there are more than 80 interest groups around Lake Chapala, home to Mexico’s biggest expat community. Another benefit is that unlike many other retirement havens, you could actually drive to Mexico and the weather in Mexico, especially from October to April, is hard to beat.
In Malaysia, you can live quite comfortably. For instance, you can rent a sea-view apartment on Penang Island for $1,000 a month. Plus, Malaysia has a unique retirement benefit called the My Second Home program, which is open to all foreigners who want to retire to one of Asia’s best-value destinations. While it might not seem so, Malaysia is an easy place in which to integrate. You’ll find plenty of locals who want to practice their English-speaking skills. You can also catch a feature movie — in English — for $4.00 and there’s a good infrastructure in place for retirees. There’s Internet access, quality roads and cell phone coverage, among other must-haves for ex-pats.
If you’re looking for a bit of excitement in your life, consider Medellin in Colombia. It is, according to International Living, among the more exciting retirement havens. The city and country offers retirees low property prices and perfect climate. It has everything one would want in a second home location, with none of the drawbacks that come with many Latin American cities.
True, criminal groups seem a threat, but in its favor, the United Nations did grant the country a non-permanent seat on the UN Security Council for the 2011-12 term. As well, a global poll rated Colombia as the most hopeful country in Latin America, and seventh in the world.
Queenstown, New Zealand
Language, obviously, is the biggest factor in how easily you can make friends and build up a new network in your overseas home. That means English-speaking countries like Belize, Ireland and New Zealand do well. International Living has also said that New Zealand is among the healthiest places to live in the world. It affords expats a pollution-free environment and awesome landscapes. Plus, winters in Canada are summers in New Zealand so you could consider retiring there part-time.
Like many countries in Central America, the cost of living is what makes Nicaragua a top haven for retirees. According to International Living, you can spend about $1,200 a month and live quite nicely. For instance, regular fare at typical restaurants runs about $2 to $3 for a ‘local’ meal. The local beers, which are good, run from 75 cents to $1.50. Nicaragua is also an easy place in which to integrate. There’s an expat community in Granada thus making new friends and establishing yourself in the community is fairly easy.
Nicaragua can also be an exciting place to live as well, especially for surfers. Some of the best waves can be found in Nicaragua and Costa Rica’s Pacific Coasts.
As for health care you’ll find first-class hospitals and clinics where care is second-to-none, and the staff are often U.S.-trained in each of its top 10 havens. While the care is similar to Canada in many places, it’s a lot cheaper. For instance, a visit to the doctor in Nicaragua runs about $15.
Park Guell, Barcelona, Spain
Spain is the only European country to be listed among International Living’s top 10 retirement havens. The reason? That country is among the more exciting places to which to retire. For foodies in love with culture, Spain and Italy offer a menu of delights unmatched anywhere else, even the smallest villages ooze history, and art is everywhere. You’ll find delicious three-course meals for less than $20 in both countries.
Of course, with Spain, you’ll also find a country struggling with debt but, what the heck, you can at least eat drink and be merry while the European crisis unfolds.
As with Malaysia, it can be fairly inexpensive to live in Thailand. According to International Living, you can live comfortably for less than $1,000 a month on a powder-sand beach in Thailand. In fact, it’s likely you could find a very nice, livable place just about anywhere in the country for about $500 a month. As with Malaysia, you’ll find plenty of locals happy to practice their English with you, so integration shouldn’t be too much of an issue. For excitement, what could top Bangkok.
Half Moon Bay, West End, Roatan, Honduras
Honduras, which is just north of Nicaragua in Central America, is the world’s 10th best place to retire, according to International Living. It is cheap to live there and the surfing is great. One expat, for instance, is spending just $1,400 a month to live yards from a white-sand beach on the island of Roatan. Plus, it’s only five-hour flight from most areas of Canada. If you love the sea, then Roatan is among the places for you. It’s got scuba diving, fishing, sailing, kayaking, snorkeling some of the best surfing in Central America.
Leaving Canada permanently in retirement is a major decision not to be undertaken lightly. Whatever your reasons, detailed research and planning is required. You need to know the implications on your personal taxes, and your assets and investments. You would do well to consult with an experienced advisor who specializes in permanent moves, not only to become familiar with the requirements, but also to develop investment, tax planning and estate strategies.
Make sure you spend as much time on the ground in the country to which you plan to retire. Vacationing in a country is much different from living there. When you vacation somewhere, you never really have to open a bank account or order phone service. Instead, rent a place in your retirement paradise for a while. If it works out, plan your move and do it. Plan on there being some culture shock when you retire abroad. Don’t expect to go and everything is the same. It’s not Canada. You have to go with an open mind and tolerance for change, and a different way of doing things. Living abroad is not for everybody. There is a different set of challenges.
A very good website that breaks down a lot of the things you should consider and also lists the pros and cons of each country is the Expat Information Guide located at: Information Guide. Good luck and enjoy!!