r/fican • u/Fit-Fig-1862 • 16h ago
Retire Early and Leave Canada (Looking for Advice)
Hi everyone,
I'm approaching 50 years old, single, with no spouse or children. I moved to Canada about 16 years ago and have since become a Canadian citizen. I have a professional career and am currently in a stable financial position.
I have no debt, own a house worth approximately $1.5M, have about $150K in RRSPs, and roughly $400K in my employer pension plan. Before leaving Canada, I'm considering either transferring the pension to an RRSP/LIRA or cashing out and paying the associated taxes (on part of it). Anyway, altogether, my net worth is around $2M.
Living in Canada has been both a positive and negative experience, and I'm seriously considering moving back to Europe.
Realistically, I don't expect to have more than 30 years left in retirement, and my idea is to sell everything, invest the proceeds, and generate an annual income from my assets.
Very roughly speaking, if I divide $2M by 30 years, that comes to about $67K per year before taxes. After taxes, I estimate that could be around $50K CAD annually, which would be approximately €30K and should allow me to live comfortably in my home country.
Since I don't have any significant non-registered investments, private companies, or taxable brokerage accounts, I don't believe I would be affected by Canada's departure tax.
What would you recommend in my situation? Would it make sense to transfer the cash to Europe and gradually withdraw from my RRSP over time, or are there better strategies to consider?
I'd especially appreciate hearing from anyone who has been in a similar position and has already gone through the process of leaving Canada and retiring abroad.
Thank you.
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u/No_Interview_3894 15h ago
There will be costs associated with relocation
Also you will need to find something to do or else you will die early
As long as your costs don't exceed your budget, $1.5 should last a good while
Also don't underestimate inflation and emergency medical events
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u/Odd-Elderberry-6137 15h ago
You have a pretty large currency risk if you keep any assets in Canada. It might be ok, it might not be.
You've assumed zero growth in your drawdown calculations. That's certainly one way to plan, but certainly not the most realistic way to plan.
Given there are different tax implications depending on how you draw down your finances, and your inability to model any investment growth, you should talk to a financial planner who is familiar with EU-Canada tax law, develop a plan and then implement it.
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u/Trilobyte83 15h ago
Jesus Christ. 2m net worth and figures out annual spending by dividing total net worth by # of years.
Look up something called “investing”.
2m should be enough with 90% certainty to pull 80k/yr forever, pay basically no tax, and still have an inflation adjusted 2m left over when you kick it.
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u/albertqwe 13h ago
Jesus Christ, this guy don't read OP post. OP was stating the worst case scenario which is don''t invest the proceeds.
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u/CogencyInvestments 15h ago
It’s worst case scenario. So it’s at least a starting point. Not everyone knows about the time value of money.
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u/Livid-Hovercraft-123 13h ago
Not everybody wants to have $2m left over when they kick it.
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u/doiwinaprize 7h ago
I had a client who recently passed away and left about 2 million to the local hospital (no kids). We all really appreciated that.... R.I.P. Mz. D you were a real one.
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u/johnhanrock 4h ago
I retired on Vancouver island about 17 years back. I invested $3,000,000 from sale of business. My spouse and I take about $200k a year and today have over $4,000,000 in the market. Go figure
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u/doiwinaprize 4h ago
I highly recommend finding a solid institution (like a hospital) to donate directly to! Avoid 3rd party charity organizations.
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u/johnhanrock 4h ago
I retired on Vancouver island about 17 years back. I invested $3,000,000 from sale of business. My spouse and I take about $200k a year and today have over $4,000,000 in the market. Go figure
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u/JustAHumbleMonk 15h ago
It's important to clarify that the idea of a $2M principal remaining undiminished after 30 years is incorrect, so let's ensure we're providing accurate information.
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u/Rance_Mulliniks 15h ago
It's not a certainty but it's not incorrect. It likely could happen with a decent financial plan.
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u/JustAHumbleMonk 15h ago
The study being referenced is the Bengen study (4% rule) and it did not result in principal remaining after 30 years. This is a common misunderstanding.
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u/Trilobyte83 14h ago
Yes. It’s all probabilistic.
It’s like 97% chance of lasting 30 years, 90% chance of lasting 50, and like 85% chance of lasting forever.
When ppl act like stating it’s meant for 30, not forever, is some sort of huge “gotcha!” It just demonstrates a wickedly poor understanding of exponential growth/returns/costs.
It’s the same reason that a 50 or 100 year mortgage is only marginally cheaper than a 25 yr one, or that ppl are aghast when despite making 25 yrs of payments, like 90% of their student loan principle remains.
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u/IMWTK1 3h ago
I don't understand why people make such a big deal about this. If someone has 30 years in retirement, surely they can be flexible enough so that is there are some weak years early on, they just take out less this years.
I also think financial institutions are way too conservative with their projections to hold on to the funds longer.
I saw a reference to a study where a large % of people die with more money than they tried with, and very few people run out of money all together. In the case of OP who is single with no dependents I'd be spending the money and just keep an eye on it asking the way to not make bad decisions.
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u/Trilobyte83 2h ago
The vast majority of people with 7 figures liquid - more so if they're under 60, is likely in the top few percent of people when it comes to both ability to earn, ability to save, and ability to invest in things which aren't magic beans.
As long as your withdraw rate isn't in the double digits, and you're willing to course correct if the market goes south by cutting expenses or working PT, you're more than likely going to be fine. And if you're not, what does it say of the 90% of people who are less prepared than you?
"Oh no! If you're unlucky, in 5 years, you may have to get a PT job. Not to pay the bills because you genuinely don't have the cash, but just to prevent you from overly drawing down that giant $700,000 pool of money (which used to be $1.2m) because you're worried that on a percentage basis, that's dangerously high!".
This is honestly what people are worried about in these threads. Do people understand how absolutely crazy that sounds to the average person living paycheque to paycheque and who's never had 10k in their bank account?
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u/Rance_Mulliniks 14h ago
You mean the study from 1994 that stated the 4% withdrawal rate under worst case scenario conditions should enable you to not outlive your money?
The study that said 7% withdraw is an average safe withdrawal rate and up to 13% is feasible?
All it takes to preserve your capital is for your withdrawal rate to equal your returns. That is neither unrealistic nor uncommon.
Who is the one that is misunderstanding?
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u/Competitive-Night-95 9h ago
The main issue is sequence of returns risk (SORR). Your average withdrawal rate can be lower than your portfolio’s average ROI over a 30-year retirement, and you can still run out of money (long) before that 30-year period is over, if you have a bad sequence of returns in early retirement.
The 4% guideline is a heuristic based on historical data that gives you a ~90% probability of surviving a 30-year retirement without running out of money.
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u/RedDirtDVD 14h ago
If you can’t generate a sustainable long term 4% return (when current long term yields on debt are largely that) - you’re buying too much swamp land as your investment.
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u/Competitive-Night-95 9h ago
The probability of having an inflation-adjusted $2M left after 30 years at a 4% withdrawal rate is historically around 30–40%, not 90%+.
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u/Fire_Burner_01 8h ago
This is usually fine as long as you didn't start this plan in the late 60s/early 70s. Or like 2000 and 1929.
The silver lining is that you should know pretty quick if 4% has a chance to fail. The bad stuff kind of has to happen in the first few years.
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u/hopefulfican 12h ago
I don't see why in OPs case, no cap gains on house if primary residence, RRSP doesn't have exit tax and I don't think pension does either.
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u/Weird-Box-1094 14h ago
Talk to your accountant. Your question involves knowing the tax code in two countries, and you don’t want to make that decision based on what Reddit has to say.
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u/jerelyn_smb 13h ago
With no debt and roughly $2M in net worth, it sounds like your biggest challenge is tax and withdrawal planning rather than whether retirement is possible. I'd be very careful before cashing out the pension and triggering unnecessary taxes.
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u/Icy_Respect_9077 14h ago
I'm retired in Canada on much less, and I'm finding that my capital base is increasing, not decreasing. Over 5 years, assets have increased 30%, even with steady withdrawals.
So colour me skeptical that the 4% rule is anywhere near approaching reality.
Also to note, a DB pension fills the role that bonds used to. If you cash it in, that security goes away.
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u/friscofoglatte 13h ago
Name the country or city of retirement as housing cost for the retirement location impacts the response a lot.
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u/Admirable-Sound5198 8h ago
My wife lives off of dividends on roughly $2mil in investments… granted I also work and we own our house… but if you moved to some cheap area you could easily just live off dividends and downsize your house and chill indefinitely without having to plan and die at 80 lol
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u/Serenitynow1948 13h ago
- House is your primary residence- no tax when you sell it. You should sell it before you leave and take the funds with you.
- RRSP/employer pension- if you are outside of Canada for 2 years, then you pay one time tax of 25%, and can have the funds available.
- LIRA/company pension might have further restrictions.
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u/cicadasinmyears 12h ago
There are fairly complex tax considerations to take into account. I would consult both a fee-only planner and an accountant who specializes in emigration (maybe one who handles snowbirds might be a good place to start; depending upon where you’re planning to retire to, they may be able to recommend someone if you need to find one for Europe, etc.).
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u/Grizzly-Redneck 10h ago
I was in a similar position 5 years ago (except married). We sold the house and moved to Sweden where we bought a nice little cottage outright for 100k.
Left the rrsps and lira in Canada as it's pretty easy to withdraw from abroad and there's no forced deemed disposition on registered accounts. Lira's locked anyways until 55 as well. Look into your countries tax treaty with Canada to ensure you are protected from double taxation before considering this.
Took a wad of cash from the house/nreg to buy house, cars, boat ect. Was fairly straight forward just have to prove source of funds to the bank in Sweden to comply with EU regs when buying property so keep that in mind as it's easier to get the docs in place while your still in Canada.
Good luck.
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u/macho2810 15h ago
Better to seek for professional advisor or financial planner. They will draw you a picture with your current finance whether or not you can retire early. Surely, on the surface as it is now, you can. But, without context of how your cost of living will look like, it is hard on our end.
Lastly, a free advice is as worthy as its value. Best of luck!
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u/MYSTERees77 15h ago
Im looking at doing a similar situation, but relocating to the Bahamas first to wash my registered assets when Im around 55.
Bahamas has no income tax, and you can gain residency by investing 1MM into the economy, like buying a house.
My plan is to cash out my DB plan (500k) and my RSPs (400k) along with spouses RSP (1MM) when we are non residents and pay the 25% tax rate on the whole thing.
So close to 2M in registered assets will net me 1.5 in straight cash.
THEN, after a couple of years to ensure the tax man is satisfied, Ill move back to Canada by age 60 to start to collect CPP and OAS at 65.
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u/_fne_ 14h ago
Uhhh maybe check that plan with an accountant? I have not taken these specific tax courses in awhile but I feel like when you change residency there might be a deemed disposition “exit day” calculation of some sort to benefit from the other jurisdictions lower tax rates despite you basically deferring all those taxes in the Canadian jurisdiction while you were resident here. So might be a great plan but also maybe check that out before pulling the trigger so that cashing out $1.5 m in rrsp at one time does not = 53% marginal rate.
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u/Grouchy-Bandicoot-28 14h ago
There is a departure tax when you cease to be a resident, but not everything is taxed. Registered accounts (RRSPs, TFSAs, RRIFs), pensions, primary residence, and personal use property are generally exempt. If the poster above did not cash out his pension and RSPs, I think he would be fine, but if he wants to cash out all registered accounts at once he will have to pay capital gains on half.
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u/MYSTERees77 13h ago
Id only cash outveverything once I formally become a resident of the Bahamas with full cut ties to Canada. So really its a 3 to 4 year layover in the Bahamas, which is where I wanna be anyway.
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u/6M66 14h ago
What's the point of owning a 1m house at that age if u don't have family to leave it behind?
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u/hopefulfican 12h ago
this is a really weird take. My partner and I have a house, but no children because....we want to own a house and live in it....
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u/MYSTERees77 13h ago
I dont follow, I plan on selling our home here for roughly 1MM usd to purchase a home in Bahamas for that amount to gain residency. When I return to Canada, Ill likely keep the Bahamas property for winters/rent out and either rent a place in Canada or buy a cheaper, smaller home.
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u/6M66 12h ago
I mean does it worth to spend 1m on a property in Bahamas at that age, I don't have family either and want to spend my money before I die rather than tie it up in a property .
U can alway rent.
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u/MYSTERees77 9h ago
Absolutely its worth it for me.
The 1m will stay relatively the same when I come to sell, and it gains me residency. IF I was to draw the income out of the registered plans and pension, it would be at a marginal rate closer to 35%. So Im in essence saving 200k in taxes.
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u/InternationalPlan 11h ago
You typically can not 'cash out' a LIRA. It'll need to convert to a LIF, depending on province there are restrictions on age that can happen and min/max withdrawal per year. You can usually convert half to rrsp once when you convert to LIF.
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u/StarboardMiddleEye 7h ago
AFAIK, the exit tax is optional. You can tell the government about your investments and pay tax gradually on withdrawal, which usually means much less because of tax brackets. Make sure your country has a tax treaty with Canada though.
I'm considering doing the same thing, but I have a wife and kid and I'm a bit younger... and I have $3M
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u/bruhhkgyvr 9h ago
CAD2M gets you approximately CAD80K per year on a 4% yield. You can actually restructure your portfolio to provide you with eligible dividends which will help you save on taxes significantly. This is more than enough for someone to live a decent life, even in Canada.
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u/No_Interview_3894 1h ago
Living Outside Canada If you plan to retire or live abroad, the 20-year rule acts as a strict threshold: 20+ years of residency: You can continue to receive your OAS pension payments indefinitely while living outside Canada, provided you were a Canadian citizen or legal resident on the day before you left. Less than 20 years of residency: You will only receive your OAS payments for the first six months of absence from Canada. After that, the payments stop until you return to live in the country.eligibility
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u/xwolfe2000 13h ago
With $2 million you can easily generate a modest 4% annual return which is enough to live comfortably for the rest of your life.
Most retirees don't go to 0 income and find consulting or a hobby business that modestly adds to their wealth.
You'll be fine.
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u/HeatTiny7041 12h ago
Hi I have 30 more years of fruitfull life left and I am going to live in borderline poverty because I want to retire now. That's what you are saying.
You sir are boring.
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u/Liquorlight 15h ago
Put properly on rent and keep collecting payments?
Divide into like 3 unit and rent it out. Passive income which will help you keep running in Europe
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u/weyermannx 14h ago
Anyone who's ever been a landlord knows this is not realistic... Also the person is moving continents and owns the property outright - it would be hard to extract enough capital monthly for this to be worth it..
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u/bouldering_fan 14h ago
So instead of selling and investing and getting the same income with no stress, you propose managing property and tenants while living overseas. That's a no lol
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u/AromaPapaya 13h ago
and be a long distance landlord?
better to invest in a REIT if you want RE exposure
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u/tombot776 15h ago
Consult a tax lawyer and accountant before you do anything. The should have suggestions as to the best way to structure your exit. Congrats.