Why Not Head North Instead?

Canada's entry rules are strict, but retirees say life there is well worth the trouble.

If you don't need a palm tree on your patio, Canada can be an attractive place to retire. In addition to universal health care and cheap prescription drugs, our neighbor to the north offers a favorable exchange rate, surprisingly livable climates in places such as Vancouver, and a familiar, safe, English-speaking society (the last in all but Quebec).

But don't think you can just move across the border. Reluctant to extend its largesse to legions of retirees from the south, the Canadians have stringent requirements for establishing residency.

Some U.S. retirees, such as John Paulson, 69, and his wife, Colleen, 43, got into the country because they have family ties. The Paulsons, who moved four years ago from Portland, Ore., to Kelowna, B.C., in the Okanagan Valley, about a 3 1/2-hour drive east of Vancouver, qualified because her mother was Canadian and Colleen had dual citizenship.

THREE WAYS TO PLAY

Without a family tie, your can try to qualify as an investor or entrepreneur. Investors must show a net worth of about $607,000 (U.S.) and fork over what Mike Bradley, senior financial analyst for the government's business immigration section, calls "a pound of flesh." That's $304,000 (U.S.) to be invested for five years in a noninterest-bearing, economic development account. If you plan to start a business, you must have a net worth of $228,000 (U.S.). You also must show business experience and guarantee that the startup will create the equivalent of at least one full-time job in Canada within three years. This is best for those who want to work for a while before retiring.

If you apply to immigrate through the Canadian government, the paperwork typically takes about three years, Bradley says. But go through the "provincial nomination" programs and you may be able to cut the time to about a year if you have the skills or type of business a particular province is seeking.

Most Americans willing to jump through the immigration hoops do so for lifestyle reasons. "The quality of life is so much better up here," says Colleen Paulson, who was a real estate agent in Portland, while her husband worked for a district office of the Federal Aviation Administration. Their house has a mountain view, and she likes "the arid climate, with summer temperatures between about 70 and 90 degrees." Winter temperatures are no worse than, say, Vail, Colo. Their routine includes golfing, hiking, skiing, and fishing. She also makes pottery in a home studio.

Retirees who prefer an urban lifestyle can choose from a number of cosmopolitan cities. Vancouver on the West Coast has the most moderate climate, with average temperatures in the 40s in January and February. Toronto and Montreal are exciting places, but their winters are much colder and longer.

Be aware that regardless of where you live, you must help finance your residency benefits by paying taxes to Canada as well as to the U.S. -- and the rates differ depending on the province. Although a treaty between the two countries will help you avoid double taxation, your total tax bill is likely to be 8% to 15% higher than in the U.S.

If you don't want to establish residency, you can still make Canada part of your retirement lifestyle. That's what Richard and Katherine Lawson, ages 72 and 58, do: They spend up to six months a year there -- the maximum period nonresidents can stay at a time -- but pay their taxes and go to the doctor in the U.S. For about $330,000 (U.S.), the Williamsburg (Va.) couple bought a 21st-floor, 1,260-square-foot Toronto apartment with a view of Lake Ontario. When in town, they enjoy the theater, Blue Jays games, and "tons of restaurants" accessible by subway. It's a wonderful change of pace from the sultry environs where they live the rest of the time.

By Ellen Hoffman

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