Why More U.S. Federal Retirees Are Choosing Canada
For many U.S. Canada is becoming a top choice for federal retirees. Access to public healthcare, a similar culture, and proximity to family make it a practical and comfortable option.
But what happens to your federal retirement benefits if you relocate across the border?
The good news: You can still receive them.
However, taxes, healthcare, and account access will require extra attention. Here’s what you need to know if you’re planning to retire in Canada.
What Are U.S. Federal Retirement Benefits?
Depending on your employment history, you may receive one or more of the following:
- FERS (Federal Employees Retirement System): A pension plan including Social Security and the Thrift Savings Plan (TSP).
- CSRS (Civil Service Retirement System): Applies to those who began service before 1984; typically does not include Social Security.
- TSP: A federal retirement savings plan similar to a 401(k).
- FEHB (Federal Employees Health Benefits): Group health insurance available to retired federal employees.
- Social Security: Based on your work history and contributions.
You retain access to these benefits while living abroad, but there are additional steps to manage them effectively.
Can You Collect Your Federal Pension in Canada?
Yes, you can.
The Office of Personnel Management (OPM) will continue sending your pension payments while you live in Canada. Most retirees maintain a U.S. bank account for direct deposits. Some banks support international transfers, but fees and timing differ.
Tip: Ensure online account access is set up and that your retirement agency supports foreign direct deposits if you plan to use a Canadian bank.
The same rules apply to the TSP and Social Security. Your accounts remain active, and your payments will continue, but it’s wise to confirm your preferred deposit method before you move.
Social Security While Living in Canada
If you’ve worked at least 10 years in the U.S., you likely qualify for Social Security, and yes, you can receive those payments in Canada.
Thanks to the U.S.–Canada Totalization Agreement, you can combine work credits from both countries to qualify for Social Security or the Canada Pension Plan (CPP).
You may also be eligible for Old Age Security (OAS) in Canada, depending on your residency history. Social Security payments can be sent directly to Canadian banks, and the tax treaty between the two countries prevents double taxation on these benefits.
Tax Considerations
Living in Canada doesn’t exempt you from U.S. taxes.
- U.S.: Expats must continue filing a yearly tax return with the IRS.
- Canada: The Canada Revenue Agency (CRA) may also consider you a tax resident, taxing your global income.
The U.S.–Canada Tax Treaty helps prevent double taxation with credits and exemptions. It also outlines which country gets taxing rights over certain types of income, such as pensions and retirement accounts.
Certain benefits—like the TSP or CSRS pension—may be taxed differently based on how and when you access them. A cross-border tax expert can guide you through these issues.
Health Coverage in Canada
FEHB
You can remain enrolled in your FEHB plan, but most policies do not cover regular medical care outside the U.S. Some may offer limited emergency reimbursements.
Medicare
Medicare does not apply in Canada. If you keep it, you’ll still pay Part B premiums, but services in Canada won’t be covered.
Canadian Healthcare
Once you become a resident, you can enroll in a provincial health plan (e.g., OHIP in Ontario, MSP in British Columbia). Expect up to a 90-day wait—private insurance can bridge the gap. Some retirees keep supplemental private insurance long-term for services not covered by public plans.
Managing Retirement Accounts from Canada
You can manage retirement finances from abroad with ease.
- TSP Access: You can log in, manage withdrawals, and adjust investments. Enable two-factor authentication to avoid login issues from abroad.
- Currency Exchange: Converting from USD to CAD involves fluctuating rates. Using currency tools or timing transfers wisely can help preserve value.
If you’re still employed and contributing to TSP, you can continue until you leave federal service. After that, your account remains active, but contributions end.
Before You Move: Key Considerations
Retiring in Canada takes more than updating your address. Prepare for these key areas:
- Immigration: You’ll need legal status—permanent residency, spousal sponsorship, or another visa—to stay long-term.
- Banking: Maintaining a U.S. account can simplify benefit deposits and tax filings.
- Estate Planning: Update wills, powers of attorney, and insurance documents to align with Canadian law.
- Mailing Address: Some retirees keep a U.S. address for simplicity in communications and government correspondence.
Final Thoughts
You don’t lose U.S. benefits by retiring in Canada. federal benefits—but it does require planning.
You can collect your pension, Social Security, and manage your TSP. But healthcare will shift, and taxes become more complex. Working with professionals familiar with both countries’ systems can make the transition smoother.
With thoughtful preparation, Canada can offer a peaceful, well-supported retirement—without losing access to the benefits you earned.
frequently asked questions
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1. Can I still receive my U.S. federal pension in Canada?
Yes. Whether you're under FERS or CSRS, your pension can be deposited into a U.S. or Canadian bank account through international direct deposit.
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2. Will I lose Social Security benefits if I retire in Canada?
No. You can receive Social Security while living in Canada, thanks to the U.S.-Canada Totalization Agreement, as long as you meet the required work credits.
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3. Do I have to pay taxes in both the U.S. and Canada on retirement income?
It depends. The U.S.-Canada tax treaty helps prevent double taxation, but your tax obligations will vary based on your residency, income type, and filing status. A cross-border tax advisor is strongly recommended.
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4. Can I use my FEHB health insurance in Canada?
FEHB usually excludes non-emergency medical care received outside the U.S. You’ll likely need provincial health coverage or private insurance for non-emergency treatment in Canada.
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5. What happens to my Thrift Savings Plan (TSP) if I move to Canada?
You can still access your TSP, but currency conversion, cross-border banking, and tax implications make professional guidance valuable when managing withdrawals abroad.
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6. Does Medicare cover me in Canada?
Not in most cases. Medicare only provides limited coverage outside the U.S., typically during emergencies near the border. You’ll need Canadian provincial health insurance or supplemental private coverage.
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7. Do I need to notify U.S. agencies if I move to Canada?
Yes. Notify the Office of Personnel Management (OPM), Social Security Administration (SSA), and TSP to avoid payment disruptions.
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8. Is healthcare free for U.S. retirees in Canada?
No, not immediately. You must become a legal resident of a Canadian province and enroll in its health plan. Most provinces have a waiting period of up to three months before coverage begins.
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9. Can I keep a U.S. mailing address while living in Canada?
Yes, and it can help manage mail or accounts. However, your physical residency—not mailing address—determines tax and benefit status.
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10. Should I speak with a financial advisor before moving?
Absolutely. A cross-border financial advisor can help protect your benefits, avoid tax issues, and create a retirement strategy that works on both sides of the border.
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