How to Retire in Paradise

Some people want to spend their post-work years in a warm climate. Here’s how to deal with the paperwork when retiring outside Canada.


In 2009, Bernd Sawatzki and his wife, Margaret, packed up, put their house in Caledon, Ontario, on the market and moved to Mexico. Heart problems had prompted him to sell his decor and construction business just a few years before.

“When you get a triple bypass, you think differently about things,” says the now 73-year-old.

You may be leaving the country, but that doesn’t mean you’ve escaped the CRA.

With little tying them to Canada – their two adult kids lived overseas and their extended family was in Germany – the Sawatzkis didn’t see the appeal in only going south for part of the year, especially since that meant leaving their house empty for six months.

Now, nearly a decade in, they’re living in a custom-built home on a lake near Guadalajara, healthy and keeping busy with friends and hobbies.

Some Canadians have similar plans to move to a tropical clime during retirement. It requires extra planning and paperwork around things like taxes and health insurance, but it can be done.

Do your homework

Before selling all your possessions, gather as much information as you can and test out your new home, suggests Jeanette Boleantu of the Expatriate Group, a firm in Calgary that specializes in tax advice for expats. Consider renting out your house, for instance, for a year before selling.

Gather information from trusted websites or professionals – your friends mean well with their advice, but everyone’s situation is different. When hiring accountants, lawyers and insurance brokers, look for people who have a lot of experience working with expats. Rules change often around tax-reporting guidelines and visas, and you’ll want someone who is in the know, says Boleantu.

Tax time

You may be leaving the country, but that doesn’t mean you’ve escaped the CRA: Sawatzki still files annual tax returns and pays taxes on his Canadian investment income. Whether you have to file a tax return will depend on your situation, but if you derive any income from dividend-paying stocks, or real estate you rent out, you will have to pay taxes here.

However, Boleantu says taxes shouldn’t be a deal-breaker. “You don’t have to move your money out of Canada,” she says. Keeping a condo or cottage here offers you a place to stay if you return. If you do move your financial assets, you will have to pay taxes on them in a different jurisdiction.

Canadian, eh?

Although many people worry about their residency status if they move abroad, Boleantu says it’s a non-issue. “You are not giving away your passport,” she says. You’re still a Canadian citizen, and your tax obligations have more to do with where you’re earning income than where you actually reside. (But if you are gone for longer than five years, you can no longer vote, although that rule is under review.)

Meanwhile, you will likely still be able to receive the Canada Pension Plan and Old Age Security benefits. You have to have contributed to these plans for 20 years, but some countries have social-security agreements with Canada that will lower that threshold. Government resources and your advisors can help you determine what you’re eligible for.

Health and happiness

You won’t keep your health coverage if you move away, so getting private insurance is a must. Try to get government coverage in your new home as well – that’s what the Sawatzkis have done. If you ever need to come back to Canada (which Boleantu says many do in their later years when they require things like long-term care ), you can easily re-enroll in provincial health-care plans, although there might be a delay in coverage in some provinces.

Once you move away, it’s important to stay in touch with Canadian professionals to keep on top of your taxes and any other issues that arise – a small effort and price to pay for retirement in paradise. “We will stay here forever,” says Sawatzki. “We have everything we want here, including beautiful weather every day.”

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