10/31/2011 4:21 PM ET|
Why retiring in Canada can be better
The US and its northern neighbor offer a similar range of services to retirees, whether it's tax-advantaged investment plans or social insurance programs. But major differences exist.
Planning for retirement involves a wide range of considerations, from determining the ideal types of accounts and investments to be included in a retirement plan to budgeting for future vacation traveling. Another essential consideration is your desired retirement destination. While weather and entertainment facilities are definitely worth considering, the types of financial and health care incentives that governments provide to their retirees also carry significant weight.
American and Canadian governments provide many of the same types of services to those planning for retirement. Yet there are subtle differences between the two countries that are worth noting.
RRSP vs. traditional IRA
The Canadian government offers several unique alternatives that individuals can take advantage of to avoid paying excessive taxes. Registered Retirement Savings Plans allow investors to receive a tax deduction on their yearly contributions, and the tax-efficient income growth raises the benefits of compounded returns. Contributions can be made until the age of 71, and the government sets maximum limits on the amount of funds that can be placed into an RRSP account. Withdrawals can occur at any time but are classified as taxable income, which becomes subject to withholding taxes. In the year in which the taxpayer turns 71, the RRSP must be either cashed out or rolled over into either an annuity or a Registered Retirement Income Fund.
For American taxpayers, a traditional IRA is structured to provide the same sorts of benefits -- contributions are tax-deductible and capital gains are tax-deferred until distributions from the account are made. Age stipulations are similar; investors can contribute to their traditional IRA until they reach 70½, at which point mandatory distributions are required.
In contrast to the rules for an RRSP account, which has a maximum contribution just over $20,000, the Internal Revenue Service states that "the maximum contribution that can be made to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for the taxable year." Although RRSPs allow for greater contributions, wealthy Canadians tend to pay more taxes than their southern neighbors.
TFSA vs. Roth IRA
Canada's Tax-Free Savings Account is fairly similar to Roth IRAs in the U.S. Both of these retirement-focused vehicles are commonly known as tax-exempt accounts, meaning that they are funded with after-tax money and provide tax-free growth, and funds can be withdrawn without taxation. TFSAs allow for long-term retirement planning, as Canadian residents over 18 can contribute $5,000 annually.
On the other hand, almost anyone can contribute to a Roth IRA regardless of age. More important, maximum contributions are also $5,000 ($6,000 for those over 50). Another similarity with these accounts, one that differentiates them from tax-deferred plans, is that there is no limit on when you must stop contributions and begin withdrawing money.
TFSAs offer two significant advantages over the American alternative. Young Canadians saving for retirement are able to carry over their allowed contributions to future years, while such an option is not available with Roth IRAs. For example, if a 35-year-old Canadian taxpayer is unable to contribute $5,000 into his account, next year the total allowable amount accumulates to $10,000.
Secondly, distributions from Roth IRAs must be classified as "qualified" to get the preferential tax treatment. Qualified distributions are those made after the account has been open for five years and the taxpayer is either disabled or is over 59½. Canada's TFSAs offer more flexibility, since the money can be withdrawn at any time without a tax penalty. (Should you convert to a Roth IRA? Check MSN Money's calculator to find out.)
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I am proud to be a Canadian, born and raised! We may have to pay higher taxes but I'm guaranteed all the amenities that come from those taxes. I don't have to worry about dying in a hospital doorway because I don't have insurance. No one has died sitting in a waiting room while the health care professionals kept walking bye them. We don't think ourselves SUPERIOR to the rest of the world or feel a sense of ENTITLEMENT when we are visiting abroad. Canadians are not looked at seethingly because of where we come from. We help those in need when the occassion calls for it. There is something wrong with a country's people when they disrespect their president with name calling and such goings on. Face it Americans.....you have a black president!! Everytime you try something unethical it comes back to bite you all big time in your butts. Unfortunately it is the innocent people who suffer in your country. Why is there OCCUPY this place and that (started in USA) and has gained momentum all over the world? It's because as a nation your people and the rest of the world have had enough of your greed, arrogance and uncaring attituedes. Regardless of how most of you Americans think of Canada; I feel safe, healthy, able to eat fruits and veggies regularly and still able to smile at everyone I meet without judging them on their race, creed or religion! You get back what you put out in the Universe.
Anywhere but this S******e america treats it's citizens like crap, there is now way you can survive here let alone retire.
Nine more months my son will graduate from the inferior education system and I can get out of this nightmare back to OZ.
At least I can get medical treatment and be treated with some dignity.
Before you right wing nut cases slam national health like a chicken going to bat for colonel sanders - America is the only supossed civilized country that does not have it and the American economy is in DEPRESSION.
Australia unemployment 4 - 5% explain that one.
My wife and I are retired, and have lived in RV parks in Arizona for a number of years. We have had many canadian neighbors down for the winter. We found them to be the very best neighbors and friendliest
people. In discussing the economy, health, and all subjects, they never gave us a negative response. When we asked the proverbial question "Would you want to live in the United States?" They answered with a very polite, "NO THANK YOU" Need I say more????????
Truthful746 is a hippie and a liar. He is neither truthful nor is he 746. The "war machine" generates hundreds of billions of dollars for local communities. Remember the base realignment commission that recommended closing down military installations? Every single community fought tooth and nail to keep them open and spending. You have been pooped.
My friend is living in Colombia and he is so happy, the weather is always about 75 degrees, and the food is inexpensive and healthy a variety of fruits right from the farms, and the american dollars are big money there.
All of Canada's major cities are mostly in the south, close to the border. So the weather is the same, for the most part, as the northern U.S., for most Candians. So, unless you choose to live way up north where it is really cold, the weather in Canada isnt much different than the northern U.S. Its barely a 100 miles between Seattle and Vancouver, or Toronto and Buffalo.
Taxes are higher.. But unlike the U.S, the money is actually spent on Canadians. Their safety net is second to very few. I think Sweden is the only one thats better. They have many non-profit government run businesses that give HUGE savings. Especially in the insurance field. No carpet baggers up here!
The best thing about Canada, is the low population. Only 30 million. Theres still room to breath up here.
Average wait for an MRI, and thats if its not urgent, is typically a month in most places in Canada. As I said, thats if its not urgent. You get much faster service, if it is urgent. For non-urgent care, there has to be wait lists, thats how we keep it cheap!!!!! We dont have private insurance, because we dont need it. We have government NON-PROFIT insurance. No middle men sucking millions off the sickness of others up here. The supplemental insurance, is to cover the few things the government insurance doesnt cover. Like medications that arent covered, private rooms all to yourself, etc. On the other hand, Canada is listed as one of the best for overall care. Much higher than the U.S.. And as a result, has a higher life expectancy statistic, and lower infant mortality rate than the U.S. does. So they are obviously doing something right. Oh, and nobody goes bankrupt because of a family illness either.
I wouldnt give up our Healthcare system, for the U.S. system, if you paid me. You Americans should thank your lucky stars, if you manage to get a system that's even remotely like what Canada has. And you wont find many Canadians who would disagree with that either.
Waiting list for an MRI in Canada may be as long as a year or more.
Waiting for your dog to have an MRI in Canada. About 24 hours.
You can buy private insurance for your dog in Canada but for humans only supplemental insurance is legal which pays for private room and such.
Let you pets retire in Canada. They will get better medical care than you.
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