The Race to FIRE - Financial Independence, Retire Early

We are Americanadian

We are Americanadian

We are AMERICANADIAN. It’s pronounced A Merry Canadian. And the definition is someone who lives in both America AND Canada. Not to be confused with a SNOWBIRD, who lives in the southern US during the winter months only.

Let me explain.

It’s only a couple of years until the big day arrives. The day my husband joins me in early retirement.

Since that’s practically all we talk about (or even think about), we’re very focused on where we are going to live after the big day.

The way we see it, there are 3 options:

live full-time in Canada

live full-time in the US or

split our time between the 2 countries.

Of course, there are pros and cons to each of these options.

Option 1: Live Full-time in Canada

Honestly, this is my least favorite option. That’s probably not a surprise to you if you’ve spent any time reading any of my previous posts.

There are definitely some things I love about Canada: the people are very nice, our kids have lots of friends here, the biggest (and best) farmer’s market in Canada is only a kilometer (about a 1/2 mile) away, and it never, ever gets blazing hot in the summer.

Then there’s the free healthcare. Probably the biggest single reason we would ever consider making Canada our permanent home.

The affordability of post-secondary education also makes this option more attractive. When my husband retires, we’ll have at least 2 kids in school. Hopefully, only 2 kids. More about that later.

In Canada, the tuition for post-secondary education averages about $7k per year, regardless of which college or university you choose. This is a steal compared to US universities.

Don’t get me started on the exorbitant cost of attending school in the US. I’ll save that rant for another post.

While there are advantages to staying in Canada full-time, this really isn’t an option I can live with. Only because I REFUSE to spend another winter in this place. If you’ve ever walked a dog in a windchill of 40 degrees below zero (and yes, that’s in Fahrenheit), you know it’s not a pleasant experience.

Just walking into the garage when temperatures don’t get above zero for weeks at a time is not pleasant. There is no way to keep warm. Not even my beloved Canada Goose coat is enough to make me want to stay.

Related: For more about my BELOVED Canada Goose, read Great American Companies You Didn’t Know Were Canadian.

Option 2: Live Full-time in the US

This is my preferred option. But, I don’t think the finances will work.

First, there’s the healthcare dilemma. When my husband retires, we will be 12 years shy of qualifying for Medicare. And while 12 years doesn’t seem that long in the grand scheme of things, it’s a long time to pay for health insurance. Especially with US healthcare constantly being debated in DC.

It’s hard to budget for something when you don’t know what the cost will be 2 years from now. Or even 2 months from now. Who knows what changes to the Affordable Care Act (Obamacare) are in the works?

We’ve looked into self-insuring our healthcare. No thank you. The risks are too great.

We’ve also investigated Christian health share plans, where members share the costs of each other’s healthcare. While this is a viable option, it is relatively new in the insurance market.

Besides, it’s hard to beat FREE healthcare. Especially when it’s really good.

Related: See Single-Payer Healthcare – Painful or Painless?

Second, there’s a matter of cash. Almost all our US assets are in retirement accounts, which we can’t access without penalty until age 59 ½. There are exceptions in which we could get the money sooner, like a 72(t) or SEPP. However, the amount of money we can access through a 72(t) is not enough to live on. We also aren’t keen on draining our retirement accounts. We’d prefer to let the magic of compounding continue to work on our tax-deferred investments.

If we were to move to the US permanently, we would sell our home in Canada. That would leave us with significant cash in Canada. Unfortunately, it appears that the exchange rate of the Canadian Dollar (CAD) to the US Dollar (USD) is stuck in the .7 to .8 range. We really don’t want to take a 25% loss on the money if we elect to move everything to the US.

Option 3: Split our Time between the Two Countries

Over the past few months, we have been researching exactly how much time we must spend in Canada each year to maintain our access to healthcare, as well as our insurance for the property and automobiles.

The rules for OHIP (Ontario Health Insurance Plan) allow us to spend up to 212 days per year out of the country and still receive full benefits. That translates to 5 months in Canada and 7 months in the US.

I’ll take it. Five months doesn’t seem so bad. Especially if that means we can spend the coldest months of the year basking in the warmth of the sun in the southern US (aka Snowbirds).

Not so fast though.

The more stringent requirement is from our insurance carrier (auto and property). They require that we spend no more than 180 days per year outside of Canada. That translates to 6 months in Canada and 6 months in the US.

Not ideal, but I’ll still take it.

This would also allow us to draw down the money we have in taxable accounts in each country during the early years in our retirement. It would allow the tax-deferred accounts to continue to grow. It would also eliminate the need to convert money and save the conversion costs and any losses due to the exchange rate.

The final piece of the puzzle will be our 3 kids. Although I hope that we all wind up in the US, there’s a real possibility that 1 or more of the kids could make Canada their permanent home.

I joke to my friends that I’m just 1 girlfriend away from Canadian grandchildren!

Our oldest son is eager to leave Canada. He’s anxious to get back to good friends, be close to family, great sports and food.

Before I get hate mail, I’ll admit that there are great sports in Canada. If you love hockey. We prefer football. And for that, there’s no place like the good ole USA.

Canada also has great food. If you love poutine. We prefer fried chicken, grits and biscuits. And for that, there’s no place like the good ole USA.

Our son is hoping to find a job in the southern US when he graduates. Coincidentally, he graduates in April 2020. Just 2 months prior to my husband’s planned retirement. If the current US job market holds, we hope he will be able to find a job in the South. He’s been interning (though his school’s co-op program) at a great company, so we hope this will give him a leg up when it comes to finding a job in the US.

Our middle child will be entering his 3rd year at a Canadian university when my husband retires. He is also hoping to return to the US when he graduates. But since he’s just started his first year at school, he could easily change his mind. Or meet a girl. Remember my joke about the Canadian grandchildren.

Then there’s our youngest daughter. She has no clue what she wants to do after graduation from high school. She knows she wants to continue her education, but not sure in what. The jury’s still out on where she will go to school.

She’s also got the best grades of the 3 kids. Our oldest son didn’t qualify for any merit scholarship. The middle son qualified for a small entrance bursary at his university. It certainly helped, but it was by no means a full ride.

It looks like of all the kids, she has the best chance of getting merit scholarships for post-secondary. Of course, we have no idea how she will test on the SAT if she chooses to go to a US school. She’s scheduled to take the PSAT for the first time in mid-October.

She may want to stay in Canada for school. Most of her friends will be going to school here. And frankly, with an annual tuition of approximately $7K for a post-secondary university in Canada, it’s hard to beat the price.

The plan

So, there you have it. Option 3 appears to be the winner.

We will truly be Americanadian.

Since the time out of Canada does not have to be continuous to keep our healthcare and insurance, we can pick and choose the best time to be out of the country. Let me assure you I will not be in Canada in January or February.

For the record, none of our plans are set in stone. Our plans may change depending on where the kids live. In the meantime, puh-lease no Canadian girlfriends!

Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin

If you like it, please share it...


2 thoughts on “We are Americanadian”

  • Okay, you just answered my previous question with this one. I think you’re onto something by remaining canadian residents that “winter” in the US. Ideally we’d like to have a place in Palm Springs and then “summer” in Muskoka or a condo downtown. We’ll see how it goes, but this has been super helpful. Thanks!

    BTW – can you still collect american social security if you are a canadian resident?

    • Yes, you can collect social security no matter where you reside. You have to accrue enough credits (most people need 40 credits) to qualify for social security. You earn credits through your work (up to 4 credits each year).

      Canada and the US have an agreement so that workers can not be penalized for working in either country.

      You can get a social security estimate of benefits at their website.

      We are using the latest estimate of benefits from Social Security, which shows that my husband contributed zero dollars since 2011 (when we moved to Canada) and I contributed zero dollars since 2000. We both have enough credits to qualify for Social Security. In addition, we will also collect CPP (Canadian Pension Plan) from our work in Canada. I worked less than a year in Canada, so I my CPP is around $35 per month.

      Also, full retirement age for social security is currently 67. Full retirement age in Canada is 65. Early retirement is 62 in the US and 60 in Canada.

      We are using estimates from social security and CPP to determine how much we will get from both countries when we hit retirement age.

Leave a Reply

Your email address will not be published. Required fields are marked *


Join the Race to Financial Independence!

Sign up to get the latest blog posts straight to your inbox.