Thinking about retiring abroad?
Retirement marks the start of a new chapter in life, and for many Canadians, this chapter involves moving overseas to make the most of it. Your dream retirement could involve sunnier weather and relaxing by the beach, or plenty of adventure discovering a new culture. Whatever your reason for leaving, there are many things to think about before deciding to go.
Things to consider when deciding to retire abroad
There are some things to consider when it comes to your dream retirement, including:
Do you want to live overseas full-time or part-time?
You may want to move away to be nearer to family and friends, to enjoy a different quality of life, or to make the most of a more moderate climate. You may want to make the move permanent and live overseas year-round, or become a “snowbird”, spending only the colder months of the year somewhere else.
Whether you want to leave Canada permanently or live overseas for part of the year will also impact your tax status.
Your ability to legally live in your dream retirement home will have an impact on where you choose to move. For example, you may hold or be eligible to obtain dual citizenship in some countries. Others offer a retirement visa, but the requirements vary by country and often include rules around your age, income, and limitations on your ability to work in that country.
Cost of living
A key thing to think about when planning for retirement is how much money you’ll need to live the retirement of your dreams. Things to consider include the cost of buying or renting property, especially if you plan to keep a residence in Canada as well as another overseas.
In addition to the cost of potentially running 2 properties, other things to think about include groceries, internet, daily expenses, the cost of entertainment and leisure activities if you plan to pursue hobbies in retirement, and whether you’ll need to pay privately or out-of-pocket for medical care.
Wherever your dream retirement location is, English may not be the primary language spoken. You should consider how you’ll navigate this when deciding where to move. Translation apps on your phone or services like Google Translate may help you get by on a day-to-day basis.
You could also learn the language before you start planning your move, going to classes, or taking a course online.
Paying for your retirement abroad
There’s much to think about financially when deciding whether to live overseas. For example, if you’ve spent all of part of your career working in Canada, you may be entitled to receive government retirement benefits.
Canada Pension Plan (CPP) or Quebec Pension Plan (QPP)
The CPP provides you with a monthly income once you’ve retired. You pay into the CPP during your working years, with payments automatically taken from your paycheque. If you’ve worked in Quebec, you’ll have paid into the QPP instead.
If you move overseas, you may still be able to receive CPP or QPP payments if the Government has created a social security agreement with the country you’re retiring in.
Old Age Security (OAS)
The OAS is a monthly benefit available to anyone 65 years of age or older. Payment amounts are based on your age, how long you’ve lived in Canada, and your income. You may still qualify to receive OAS payments while living outside of Canada if:
You lived in Canada for at least 20 years after turning 18 years of age
You lived and worked in a country that has a social security agreement with Canada for at least 20 years
If you don’t qualify to receive OAS payments while living overseas, these payments stop after you’ve been out of Canada for more than 6 months.
Guaranteed Income Supplement (GIS)
The GIS is a monthly payment available to low-income OAS pensioners. GIS eligibility is based on your age, income, how long you’ve lived in Canada, and your status as a Canadian Citizen or legal resident. If you leave Canada for more than 6 months, you’re not able to receive the GIS.
It’s important to let the government know you’re leaving Canada, and if you receive payments to which you’re not entitled, you’ll be asked to pay these back.
If you’re worried about making your retirement savings last, you may want to consider if part-time work in your new local area would be an option. Not only would it provide you with a source of income, but it would also help you meet local people and engage in your new community.
Before putting this option on the table, you should research whether you’ll be allowed to work in your new country, as many countries have restrictions on work as part of retirement visa requirements.
Personal savings and investments
If you have personal savings and investments that will help fund your retirement, you’ll need to think about how you’ll access this money when you move abroad. For example, you may need help setting up bank accounts in your new home country, as well as making sure you have solid internet access if you want to manage your investments online.
If you retire abroad, you may still have to pay provincial or territorial income taxes. If you’re planning to live outside of Canada for a long period of time, you should let the Canada Revenue Agency (CRA) know before you leave as they will help determine your residency status.
This will depend on things such as whether you’re leaving for part of or all of the year, and whether you still have ties to Canada in the way of owning property. If you buy property overseas, this may also impact your tax obligations. The CRA website has more details.
Thinking about medical care
The availability and cost of health care in your newly chosen home is another important thing to think about. Your provincial or territorial health plan may only cover part of health care costs incurred outside of Canada – if anything at all. As you progress through your retirement you may find you require more in the way of health care, especially if you become sick with a long-term illness.
Before relocating, you should look at the healthcare options available in your destination country.
What happens if you pass away while abroad?
One very important thing to consider, especially if you spend more than half your time overseas, is what you’ll need to do if you or your partner/spouse passes away. It’s a good idea to make sure you have a representative or beneficiary appointed to help handle your affairs and connect with any local authorities as well as the government in Canada. They’ll need to notify federal departments and programs and cancel benefits such as the OAS, CPP, and more.
If you have a life insurance policy with Canada Life, someone will need to notify us of your death, especially if they’re making a claim on your policy. There are other practicalities to think about, such as where you’d like to be buried and if/how you’ll make arrangements to be transported back to Canada.
While thinking about these things may not be pleasant, having an updated will and estate plan in place will ultimately help your family through a difficult time should something happen to you.