Cross-Border Canada–U.S. Retirement Planning – A 2025 Guide for High-Net-Worth Families

Retirement planning is never one-size-fits-all. When your life, family, or assets cross the border between Canada and the United States, the complexities multiply. Taxation, social benefits, investment management, estate planning, and healthcare are subject to two sets of rules — and the choices you make in one country may have unintended consequences in the other.

At Cardinal Point Wealth Management, we specialize in guiding high-net-worth individuals and families through these challenges. This article offers a comprehensive 2025 guide to cross-border Canada–U.S. retirement planning. We’ll cover:

• Residency and tax considerations
• Social Security and Canada Pension Plan (CPP)/Old Age Security (OAS) benefits
• Retirement accounts (RRSP, RRIF, TFSA, 401(k), IRA, Roth IRA)
• Investment management and currency risk
• Estate and succession planning
• Healthcare and insurance
• Case studies of common cross-border retiree situations

Residency and Taxation: The Foundation of Cross-Border Retirement

Determining Residency

The first step in retirement planning is understanding where you will be considered a tax resident. Both Canada and the U.S. apply different tests:

• Canada: Residential ties, such as a home, spouse, or dependents in Canada, usually determine residency.
• U.S.: Holding U.S. citizenship or a Green Card, or the “substantial presence test” applies. Even snowbirds wintering in Florida can inadvertently become U.S. residents for tax purposes if they are not careful.

The Canada–U.S. Tax Treaty offers tie-breaker rules if both countries claim residency. Proper planning can help you avoid dual taxation.

Worldwide Taxation

• Canada: Taxes residents on worldwide income.
• U.S.: Taxes citizens and green card holders on worldwide income, regardless of residence.

For U.S. citizens in Canada, this means ongoing IRS filings — even if most income is earned and taxed in Canada. Strategic planning can help reduce double taxation through foreign tax credits and treaty relief.

Social Security vs. CPP and OAS

U.S. Social Security

Eligibility requires 40 credits (10 years of work). For Canadians who worked in the U.S. for fewer years, the totalization agreement allows credits earned in Canada to count toward U.S. Social Security eligibility.

Canada Pension Plan (CPP) and Old Age Security (OAS)

• CPP: Based on contributions during working years.
• OAS: Based on years of Canadian residency after age 18, up to 40 years.

Coordinating Benefits

The Canada–U.S. totalization agreement prevents double contributions and ensures you don’t lose benefits. Key planning points:

• Claiming strategies for Social Security (e.g., deferring to age 70) vs. CPP/OAS (where deferral is only to age 70, but with smaller increases).
• Tax treatment differs: Social Security benefits are partly taxable in Canada, CPP/OAS are taxable in full in Canada, and OAS is subject to a clawback above a certain income level for Canadian tax residents.
• Survivor and spousal benefits vary between the systems.

Retirement Accounts: Maximizing Tax Efficiency Across Borders

Canadian Accounts

• RRSP/RRIF: Tax-deferred in Canada. The U.S. recognizes RRSPs/RRIFs for tax deferral under treaty provisions — but requires annual reporting. Note that some states, such as California, do not recognize the tax deferral under treaty provisions.
• TFSA: Tax-free in Canada, but not recognized in the U.S. Income and realized gains are taxable for U.S. persons.
• FHSA: Can be tax-free in Canada if used for a qualifying home purchase, but not recognized in the U.S. Income and realized gains are taxable for U.S. persons.
• RESP: Tax-deferred savings for education in Canada, but not recognized by the U.S. Income and realized gains are taxable for U.S. owners.

U.S. Accounts

• 401(k)/IRA: Tax-deferred in the U.S. Canadian residents must report income when distributions occur.
• Roth IRA: Tax-free in the U.S., but historically not recognized in Canada. The treaty provides tax-free treatment if properly elected to the Canada Revenue Agency and no further contributions are made after Canadian residency begins.

Cross-Border Planning Opportunities

• Roth IRA vs. TFSA: Similar tax-free structures, but cross-border rules differ.
• RRSP vs. 401(k): Both provide deferral at the federal level (some U.S. states tax income within RRSPs), but coordinating withdrawals to manage marginal tax brackets in each country is key.
• Avoiding double tax: Treaty provisions and careful timing of withdrawals can minimize tax leakage.

Investment Management and Currency Risk

Cross-border retirees face unique investment challenges:

• Currency fluctuations can impact portfolio returns when income and expenses are in different currencies.
• Diversification: Many Canadians are heavily weighted toward Canadian equities; moving to the U.S. may require rebalancing.
• U.S. estate tax exposure: U.S. securities held directly by Canadian residents may be subject to estate tax if above the exemption thresholds.

Strategies

• Hold investments through tax-efficient cross-border structures.
• Use dual-currency accounts to manage cash flow.
• Consider hedging strategies for large, predictable retirement expenses.

Estate and Succession Planning

U.S. Estate Tax vs. Canadian Deemed Disposition

• Canada: No estate tax, but capital gains tax applies at death (deemed disposition).
• U.S.: Estate tax applies on worldwide assets for U.S. citizens/green card holders, and on U.S.-situs assets for Canadians.

Treaty Relief

The Canada–U.S. Tax Treaty provides credits to reduce double taxation, but planning is critical for high-net-worth families with assets in both countries.

Cross-Border Wills and Trusts

• Ensure estate documents are valid in both jurisdictions.
• Consider cross-border trusts to minimize tax exposure and provide for heirs in different countries.
• For U.S. citizens in Canada, beware of Canadian “tax traps” in U.S. revocable trusts.

Healthcare and Insurance

Canada

Universal healthcare covers most needs, but retirees abroad may face limitations.

U.S.

Healthcare is one of the largest retirement expenses. Medicare eligibility begins at 65, but only for those with sufficient U.S. work history. Canadians retiring in the U.S. may need private insurance until eligible.

Cross-Border Considerations

• Canadians wintering in the U.S. require travel insurance for extended stays.
• U.S. citizens in Canada must consider whether Medicare enrollment still makes sense.
• Long-term care insurance strategies differ across borders.

Case Studies

Case Study 1: The Snowbird Couple

• Canadian citizens winter in Florida six months each year.
• Key issues: U.S. substantial presence test, U.S. estate tax on Florida property, Medicare eligibility or travel insurance, OAS clawback.

Case Study 2: U.S. Citizen Retiring in Canada

• U.S. citizen married to a Canadian spouse, living in Toronto.
• Key issues: Ongoing IRS tax filings, TFSA not tax-free in the U.S., Roth IRA protection under treaty, estate planning, U.S. citizenship for children.

Case Study 3: Cross-Border Professionals

• Couple worked in both Canada and the U.S., now planning retirement split between Vancouver and California.
• Key issues: Canadian tax residency and potential Canadian deemed departure tax; Coordinating CPP, OAS, and Social Security; tax-efficient withdrawals from RRSP and IRA; managing currency risk.

Strategic Checklist for Cross-Border Retirees

1. Determine residency and tax filing obligations.
2. Review Social Security, CPP, and OAS eligibility.
3. Map out retirement account withdrawals across both systems.
4. Align investments with currency, tax, and estate objectives.
5. Update wills, trusts, and powers of attorney for cross-border validity.
6. Secure healthcare and insurance coverage.
7. Review annually — laws and treaties evolve.

Conclusion

Cross-border Canada–U.S. retirement planning is complex, but with proper guidance, you can structure your finances to maximize after-tax income, protect your estate, and achieve peace of mind. The right strategies differ for every family — depending on citizenship, residency, assets, and lifestyle plans.

At Cardinal Point Wealth Management, we bring expertise in both Canadian and U.S. tax and financial planning to create a fully integrated retirement plan. Whether you’re a snowbird, an American living in Canada, or a Canadian with U.S. assets, we can help you chart the best path forward.