The baby boomer generation is slowly approaching the age of retirement, but for retirees who cringe at the idea of local retirement communities, shovelling snow and watching television to pass time – travelling abroad could be a great alternative.
Yes, we’re all familiar with the Canadian snowbirds. As autumn's temperature gets ever so close to zero degrees, retired Canadians flock to Florida, the aptly named "Sunshine State", to rid themselves of their winter woes. But why stop there when you can flock to sunnier states and countries on a long-term basis?
Though it seems like a great adventure, it's important to note that retiring abroad is far trickier than simply planning a vacation.
“The first thing to consider is taxes. Different locations have different tax regimes and bi-lateral tax agreements with Canada. You need to know the implications on your personal taxes, on assets you have, as well as your investments,” said Andrew Pyle, a senior wealth advisor and portfolio manager at Scotia McLeod.
Certain countries have bi-lateral tax agreements with Canada which makes the process simpler than countries that don't. Pyle recommends discussing your retirement destination options with a tax specialist who is familiar with tax arrangements in your country of choice.
10 Places Perfect For Retired Canadians. Story continues below
For a couple looking to live out their retirement in luxury, Monaco should be your destination of choice. Known as a “tax haven” for wealthy individuals (there are no income taxes), Monaco is a great way to enjoy all that money you’ve been saving for all those years. Saving is the key word, as Monaco’s cost of living is really only affordable for those who will be receiving a sufficient pension.
Sun. Sand. Beaches. This is the tropical destination for couples who spent most of their vacations enjoying the Caribbean islands and all they have to offer. What’s even better? Your grandkids will have no problems with the idea of spending their summers with you. When it comes to taxes, Turks & Caicos has no incomes taxes, property taxes or capital gains taxes. Photo Credit: James Willamor
Panama is quickly becoming known as the number one retirement destination in the world for retirees who want to leave their home countries. The country has even introduced a retiree visa to attract these individuals. Along with the visa comes a retiree benefits program that includes many discounts for items such as hydro, electricity, medical services, dental and eye exams, public transportation, as well as recreation and entertainment activities.
The Cayman Islands is well-known as a destination for financial investors. There are no personal incomes taxes, capital gains taxes or property taxes. If you’re looking to supplement your pension by working during your retirement, expatriates also receive employer-provided pensions if they’ve been working for a minimum period of nine months. That money will definitely help cover your living costs and make for a comfortable retirement setting on a beautiful Caribbean island.
Many Canadians looking to retire abroad opt for close options such as the United States or Caribbean destinations. For retirees looking for more of an exotic setting, or for those who really want to get away from North America, Thailand is a great option. This is also a destination where a retiree can stretch their dollar. The country offers long-term and retirement visas, and has introduced amenities such as golf courses in communities targeting expatriates.
Florida is a typical choice, but still a good choice. With a strong Canadian dollar, housing prices and cost of living in Florida have become very reasonable. There are also no income taxes in the state and retirees can expect lots of visitors as it’s a short four hour flight from Toronto.
Head just a little further south of Florida and you’ll find the Bahamas. This Caribbean destination has stayed close to its British ties and though it's not a low-cost option, its beauty cannot be denied. However, retiring in the Bahamas is something many retirees should begin to plan for early on in their careers. It will take advanced planning in order to be financially secure in a luxurious destination like this one. Photo Credit: Valéria Almeida
Costa Rica has a unique offering for individuals who also consider themselves environmentally-friendly. Apart from the country’s model public health system and stable government, the country has also introduced sustainable ecological policies and is also home to preserved tropical forests. For couples looking to live in a country that values eco-friendly policies, Costa Rica is a suitable choice. And let’s not forget the warm weather and enjoyable beaches. Photo Credit: Ryan Kozie
Arizona is a golfer’s paradise and that’s why many retirees choosed to settle there. With its desert location, Arizona does not see nearly as much rain throughout the year as states like Florida, so dry weather will always be reliable. Along with the weather comes the climate, which is favourable for Canadians with arthritic conditions. Not to mention it is only a short drive away from the Mexican border, so even though you will be retiring abroad, vacationing in Mexico will be a frequent possibility. Photo Credit: neepster
Arizona may have a great climate but if it is healthcare that you’re focused on, Ecuador may be the better option. Ecuador offers a low cost of living as well as great weather, but it also has a modern healthcare system that has made it a medical tourism destination. Top hospitals have come together to offer bundled programs for healthcare services at reasonable costs which has attracted many expatriates.
“Another thing that people don’t think about is their TFSA, because it isn’t tied to their income. If you become a non-resident, there is a lid on the contributions you can make, instead of the current maximum of $5,500 a year,” said Pyle.
Apart from tax issues, retirees also need to consider health and medical services and costs, political and economic security, as well as the overall culture of the country.
“You have to separate the romance of 'let’s move to Costa Rica', and do your research so that when you move you are limiting the amount of surprises you have,” said Brian Burlacoff, a certified financial planner with Sun Life Financial.
“The biggest potential surprise has to be around healthcare and understanding what your provincial health insurance will cover and for what amount of time,” said Burlacoff.
For retirees that plan to return to Canada throughout the year, most provinces will continue to cover your healthcare costs if you are out of the country for less than 183 days. The exception is Ontario where you can be out of the country for up to 212 days and still receive health coverage.
“If you are looking to do this, sit down with a financial advisor. A good financial advisor can determine if you really want to retire abroad, or if you want to do this for cash flow reasons,” said Burlacoff.
Some boomers may realize they haven’t planned well for their retirement, and only have 10 to 15 years to create a plan. A temptation might be to retire in a country where they can stretch their dollar further if Canadian living standards are out of the question. But by sitting down with a financial advisor, they may realize that they can have the retirement of their choice domestically, rather than moving abroad.
“You have to remind yourself that by moving there, you will need more than palm trees and beaches to keep you happy. A nice beach gets boring. Golf gets boring as well,” said Burlacoff.
Though there are many factors to consider, for boomers that have been bitten by the travel bug, retiring abroad is a dream come true. After all those years of hard work and saving, it may be time to simply enjoy yourself and each other.
Now the next question is – where to retire? Well, these 10 retirement-friendly destinations for Canadians -- and the perks that each location offers -- might be a good place to start.