Living Outside Canada After Retirement: A Canadian's Guide

The Pros of Retiring Abroad

Pro #1: A Lower Cost of Living

This is the most obvious benefit of living outside Canada, and it's a huge one. Many countries offer a significantly lower cost of living, which means your Canadian retirement savings can go much further. Essential expenses like housing and food often cost a fraction of what they do in Canada, allowing your money to last way longer.

A visual representation of financial growth when retiring abroad.

For example, a retiree who needs $5,500/month in Canada might find they can live comfortably on just $4,000/month in a different country, a difference that can turn a challenging financial situation into a comfortable one. Popular countries for this include Mexico, Panama, Costa Rica, Colombia, and Portugal.

Pro #2: Better Weather

It's a no-brainer for a lot of Canadians. Escaping the long, harsh winters is a major motivator for living abroad after retirement.

Pro #3: Potential Tax Benefits

Depending on your new country of residence and its tax treaty with Canada, you could see significant tax savings. While Canadian benefits like RRSP/RRIF withdrawals and CPP payments may be subject to a non-resident withholding tax, a favourable tax treaty can reduce this, allowing you to keep more of your retirement income.

It's important to research Canada's "departure tax," which treats many of your assets as if they were sold when you become a non-resident. Consulting a tax professional is crucial to understand these complex implications.

Pro #4: A More Relaxed Pace of Life

Western culture is often fast-paced, but many other countries prioritize a more chill, relaxed lifestyle. This can be a huge pro for retirees looking to slow down and enjoy their golden years.

Pro #5: Adventure and New Experiences

Retirement is a chance to finally do all the things you didn't have time for. Living abroad opens up a world of adventure, from exploring new cultures and cuisines to finding new hobbies and communities.

The Cons of Retiring Outside Canada

Con #1: Healthcare Concerns

This is often the biggest worry for Canadians considering living abroad. While Canada's healthcare system has its issues, we trust it. Moving to another country and navigating a new medical system can be daunting. It's essential to research and secure appropriate private health insurance or expat medical coverage before you leave.

Con #2: Financial and Exchange Rate Risks

Many Canadians keep their financial assets in Canada due to our stable and regulated system. Managing Canadian accounts as a non-resident can be difficult. Additionally, fluctuating exchange rates can significantly impact your budget, making your money go further one day and less the next.

Con #3: Residency and Legal Issues

Visa and residency requirements for retiring abroad can be tricky. Every country has different rules, and navigating the legal paperwork requires a lot of homework and often the help of a competent local professional.

Con #4: Distance from Family and Friends

For many, this is the biggest downside. The cost and time of travel can make it difficult to see loved ones, leading to loneliness and missing out on important life events like watching grandchildren grow up.

Con #5: Cultural and Language Barriers

While learning a new language and culture can be an adventure, it can also be frustrating. Simple tasks like shopping or dealing with bureaucracy can become major headaches.

Con #6: Losing Canadian Benefits

Not all of your Canadian benefits will follow you. Your provincial healthcare plan, for example, will not. You must research how your CPP and OAS benefits are handled when living abroad to avoid any surprises.

Living Outside Canada After Retirement: Pros and Cons