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Gold Conversationalist

calling US expat retirees !

hello!

 

Any US retirees out there who are now living outside the US? If so, I'd like to ask some questions about taxes, retirement accounts, etc. I am 99% down the path of becoming a Canadian permanent resident; still here in the US though so I have some time to try to get all our ducks in a row (or are they coconuts?)

Gold Conversationalist

fffred, I don't think you're reaching the right crowd. Even given that there are so many articles about the wonderful adventure that retirees are having moving to exotic places like Portugal, Costa Rica, Panama, Viet Nam, the Philippines, etc. Don't tell me that those articles are just written for entertainment and click-bait?! Anyway, there may be few AARP members reading these forums who are in a situation similar to yours.

 

I myself am not working ("retired"), and at 69 it's not likely that I want to be working any time soon. I'll start collecting Social Security retirement at some time within the year, either at my 70th birthday or a few months sooner should I decide to go that way.

 

My wife and I are planning to move to Canada, her second home (the US is her third home). Generally to be near her family; I don't have much family myself. I'm about 99% of the way towards becoming a Canadian permanent resident (that's the legal term). I am approved but I have to present myself at the border and get the papers signed/stamped to become a "landed immigrant".

 

I've read a number of articles, blogs, and forums about US persons moving to Canada. Mostly these have been younger people who are still deep into their working careers. Their situations differ from mine in a number of ways (and a good number of them may return to the US for retirement). But haven't seen any from someone who actually immigrated at my age or in my own situation (there are "senior" immigrants, generally brought to Canada by their children who made the move some years before and now want moms and pops there with them).

 

Golly. I wish I had had a full understanding of what this entails for me before we started on this path. If we had, we might have elected an alternate path (part-time residency as "snow birds").

 

It's easy enough to load up the truck and "move to Beverly". It will be nice to spend more time with wife's father in his last years. But there are so many complicated and complex issues with financial aspects. Some of these could be a deal-killer. 

 

What are these issues? They include such fundamentals as Social Security retirement benefits, Medicare, IRAs, Roth IRAs, income taxes, taxable investments, banking accounts, credit cards, wills and inheritances, etc. They make my head spin (and tummy churn).

 

Some considerations are elective, under my personal control and choice. Others are highly regulated and making a bad choice, through misinformation or misunderstanding, could have very dire effects on our life's savings.

 

Medicare:  Medicare doesn't cover treatment outside the US, but I will have coverage under the Canadian system. Yet, I like to have a fall-back plan. This move North might fail and we might come back in a few years. Or maybe my wife passes and I decide to move back here in a dozen years. If I withdraw from Medicare Part B to save paying the premiums (same for a Medigap policy) and then return to the US I must pay a higher premium than otherwise., this is equal to 10% for every year that I could have been with Medicare but was not (some call it a penalty but I don't think of it that way, it's simply paying into the pool of money what was omitted during the period of non-participation). So, gone for 10 years, that's 100%, so double the Medicare Part D premium. And there are the issues of open enrollment, eligibility for Medigap, etc. (And don't even think about withdrawing from Medicare Part A, that's a nuclear wasteland of effects...fortunately "A" is free for me.) I will probably carry Part B for 2 years to make certain we're safely settled in. (Wife is not yet eligible for Medicare in any case.)

 

Social Security:   No particular issues here. There are some countries where the SSA can't send money to (though they hold for you when you leave one of those proscribed countries) but Canada is good. There will be some complications I expect when wife applies for her spousal benefit and we're in Canada, but I see that even this can be done on-line on the SSA site. The SSA will even make direct deposits to foreign banks. This is not my plan though, the benefit is sent as US cash and the local bank can make up any exchange rate they want. Instead, I will maintain our US bank account to be used for direct deposit, and then make any transfers myself.

 

Credit Cards:   The credit systems of the US and Canada are separate. This is so even though the same companies are on both side of the border! Experian, Equifax, Transworld. But the sides don't talk to each other. So the US credit history doesn't transfer to Canada, and vice versa. American Express promises me a "seamless" experience getting a Canadian account. So far... complex. I can certainly use some of our US credit cards in Canada without an exchange fee, though the currency exchange rate may not be favorable. 

 

Banking:   with new laws of both countries it is difficult to open new bank accounts, identities must be fully vetted, etc. We opened a high-interest Canadian savings account a few years ago using our US address and had to jump through all sorts of hoops to get this done. I was glad we could do this because the major banks don't want to be bothered with such things (yes, some banks tout their "cross-border" friendliness but much of this is a mirage). We were able to open a chequing account recently at one major bank because my wife already had a savings account there, so opening the chequing account was relatively painless. But I can't be on that account myself unless and until I can present myself there at the bank in-person.

 

With US laws for FATCA (Foreign Account Tax Compliance Act) coming into effect in recent years many US citizens living and working in other countries found that local banks (in Europe, etc) just didn't want to deal with the documentation burden of FATCA and consequently closed the accounts of US persons; making their daily lives incredibly difficult for awhile.

 

Retirement accounts:   Yikes! this is almost the deal killer for me. I have my life's savings, so to speak, at the Vanguard mutual fund company; been a client since 1984. Should I change my address to Canada (or anywhere outside the US) my accounts are subject to some stringent restrictions. Initially I was told they would have to be shut down and closed. One agent at Vanguard gave me the misinformation that I should close the IRA accounts (a taxable event) and move the proceeds to a Canadian retirement account (cannot do this). I had visions of a huge mess and paying 50 % in income tax. It turns out that at Vanguard, I can keep the IRA accounts (and now they say I can even keep the taxable accounts), but I can only take withdrawals. Money can't be added, funds can't be bought. So this means that the investments can never be rebalanced between equities and bonds. I was really sweating this, but now that aspect almost seems "hey, not so bad!". I have found one or two other firms that will let me place the retirement accounts and retain full control over them. This is after investigating a dozen or so major firms. Anyway, one seeking emigrate should review this situation with their retirement accounts.

 

Life insurance:   fortunately this is not an issue. My term life policy is valid in Canada (but maybe not other countries)

 

And so many other issues that are more minor. Such as moving household, etc. 

 

This is likely a partial list of issues that must be addressed when emigrating to another country. The potential for expensive traps is high. Beware.

 

 

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Social Butterfly

Wow @fffred how exciting!!! If you donot mind my asking, what nudged you to become an expat? No pressure to respond 😉 

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Gold Conversationalist

@ByeAll2021 

 

 

My wife.

 

;- )

 

 

 

Her family is in Canada and she has citizenship.

 

 

 

 

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