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More than 10 percent of Canadians are open to retiring abroad, according to BMO Retirement Institute. The USA, including warm-weather states like Florida and California, has long been renowned as a prized retirement destination for Canadian snowbirds. If you’ve dreamed of spending some or all your time in America during your golden years, you need to be aware of the advantages and drawbacks. Understanding the pros and cons will be the key to making wise and informed choices about where to retire.

Tax issues can be a drawback

To minimize tax issues as you begin your early retirement, or after you turn 65, you need to know that the IRS uses a formula known as the Substantial Presence Test to determine whether Canadians spending time in America should be considered American residents for tax purposes. The formula is the total quantity of days spent in America over a three-year period. If the number exceeds 183 days, you’ll need to pay taxes in the USA.







To avoid this “con”, many Canadians decide to spend only part of their time each year in America. For example, they head for warmer climes like Miami or Palm Springs during the winter and spend the spring and summer months in Canada. This may be an option for you. If you choose the temporary option and stay in the USA under the maximum permitted amount of days for a 3-year period, your taxes and health care will remain as they are.

A warmer climate may be good for your soul

In Canada, there’s only so warm the weather is going to get, and hot weather doesn’t typically last too long. In popular USA retirement havens with warm-weather climates, it’ll be easier to bask in the sun and enjoy your ideal lifestyle. Retirees who love beach and golf life may find that retirement living in the USA is good for their souls. It may be good for their health, too. A study performed by the University of Edinburgh showed that sunlight touching skin triggers the release of nitric oxide, which helps to decrease blood pressure. It also cuts the risk of bone health problems, strokes and heart attacks. Sunshine is good for more than vitamin D.

The cost of living will probably be higher

The average cost of living in the USA is 17 percent higher than the cost of living in Canada. If you want to do the snowbird thing or live in the USA year-round during retirement, you’ll need to crunch the numbers and see if your budget can handle the higher cost of living in America. Some retirees will have enough money to enjoy USA retirement. Others may find that cost of living issues make retiring in America impractical.

Retiring in America doesn’t have to be a pipe dream. It’s possible to move there on a temporary or permanent basis. The key to planning effectively is consider tax issues, climate and the cost of living. Research carefully and get expert advice before making a final decision.