Now that Joe Biden has been elected president, there’s going to be a lot of unhappy people who want to leave this country. The capital gains tax rate might go up. The step up basis might go away. And the top marginal income tax rate might go up too! Therefore, may I present the best life hack for Americans: taking advantage of Canada!
I’m always looking for arbitrage opportunities to help readers make more money and live better lives. Taking advantage of Canada may seriously be the best American life hack of them all.
My favorite money-making arbitrage opportunity for the next couple of decades is investing in non-coastal city real estate due to lower valuations and higher net rental yields. Technology is accelerating the flow of capital and people towards attractive real estate opportunities.
However, taking advantage of Canada could be an even greater multi-decade arbitrage opportunity, especially if you have children. Despite the frigid weather for four months a year, Canadians have a lot going for them.
Their GDP per capita is a respectable $45,000. Few people go through medical bankruptcies because healthcare is heavily subsidized. Meanwhile, the average annual tuition for Canadian universities is only about $6,571 for the 2021/2022 academic year. Even compared to public university tuition in America, $6,571 a year is cheap.
Let me share how one Canadian friend is taking advantage of America and how we, in turn, can take advantage of Canada.
How Canadians Take Advantage Of America
A 25-year-old friend in my SF softball league is from Vancouver, Canada. He went to the University of British Columbia, a top five university where annual tuition is only $5,399 in the computer science department.
When he graduated, he decided not to find a job in Canada, but come down to San Francisco where the computer engineering jobs pay much more. He works for an online real estate company.
“Sam, I make twice as much in San Francisco as I would if I got a similar job in Vancouver,” my softball friend told me.
“But don’t you want to give back to your country? I thought brain drain is a big thing in Canada?” I responded.
“Yes, but let me make my money first. After five years in San Francisco making double the money, I’ll then move to Seattle with my girlfriend where my firm is headquartered. Seattle pay is similar to San Francisco pay, despite the cost of living being 30% cheaper. Further, Vancouver is only a 3.1- hour drive away.“
“Sounds like a good plan!” I responded.
“Once I’m in my 30s and ready to start a family, then I’ll move back to Canada and live a less hectic lifestyle. With a stronger government safety net, I feel more comfortable raising a family back home,” he explained.
Although I feel a little bad for Canada for not getting the benefit of his productivity after providing him with 22 years of education, I can’t fault his logic.
If Canadians wish to participate legally in our labor market and also buy and sell U.S. stocks and property, why not take advantage of the opportunity? After all, America is the greatest country in the world.
How Americans Can Take Advantage Of Canada
Following my softball friend’s logic, Americans should take advantage of Canada’s government safety net and immigrate to Canada after we’ve amassed our fortunes as well. This is the best life hack to make life easier.
One of the biggest problems we face in America is the runaway cost of healthcare. Medical-related expenses are our nation’s #1 cause for bankruptcy. It would, therefore, seem logical that those who decide to retire early and are ineligible for Medicare should migrate to Canada and get their healthcare paid for.
For example, my family of four will pay about $28,000 a year for healthcare premiums plus co-pays and co-insurance in 2021. Does this sound reasonable to you for a healthy family who never sees the physician?
To generate $28,000 in retirement income at a 4% rate of return requires me to first amass $700,000 in capital. But I will need to have closer to $850,000 in capital due to taxes. Unfortunately, interest rates have plummeted in the new decade, which means retirees should lower their safe withdrawal rates.
If my family moved to Canada, we’d be eliminating most of our present healthcare costs and could use the savings towards living a better lifestyle. We wouldn’t have to purposefully reduce our income to get healthcare subsidies either. What a shame to stop writing on Financial Samurai, something I love to do, just for the sake of affordable healthcare.
Further, given the average college tuition is only $6,571 a year, we would no longer have to contribute $30,000 a year in our son’s 529 college savings plan. We could easily afford to pay the $26,284 for four years in Canadian university tuition from the money sitting in our online savings account.
It is truly mind boggling that four years of Canadian university tuition costs $9,000 less than one year of private kindergarten in San Francisco.
Massive Savings If We Move To Canada
Saving $51,000 a year in healthcare and college expenses just by moving to Canada sounds like a home run. That’s $1,275,000 less in capital I need to amass at a 4% rate of return.
Even though the average home price in Vancouver is an absurdly high $1.4 million, it’s still about $200,000 less than the median home price in San Francisco.
Moving to Vancouver, Canada might just be the best geoarbitrage move for us. For Americans living in lower cost of living areas, there are plenty of lower cost of living areas in Canada as well.
Our Children Can Take Advantage Of Canada Too
In addition to recommending all adult Americans seeking financial independence to migrate to Canada, there’s also a way for our children to take advantage of Canada too. The best life hack is when you can help your children as well.
One of the reasons why I’m a high school tennis coach is because I want to learn how to interact with teenage boys before my own boy becomes a teenager in 2031. It may sound crazy to prepare so far in advance to be a better father, but I figure why not try? Planning is free to do.
During practice one day, I had a nice conversation with one of my favorite players, a senior who will be attending Occidental College in Southern California.
Occidental College is a good school, but I thought he was going to attend a top-10 ranked school instead. He was super smart, very wealthy, and frequently late to practice due to after school tutoring.
McGill University, The Harvard Of Canada
He mentioned a classmate was attending McGill University in Canada and I was immediately impressed. I remember having a financial analyst classmate at Goldman Sachs who had also attended McGill University.
She was extremely kind and smart. Further, she was the only one in my 1999 financial analyst class who survived the post dotbomb layoffs and made Managing Director 10 years later. MD at 33!
“McGill is the Harvard of Canada!” I exalted in a somewhat joking way. “I wonder what their acceptance rate is?“
My student responded, “Really? The Harvard of Canada? How can that be if their acceptance rate is 50%?“
“There’s no way Mcgill has a 50% acceptance rate! I’ll happily bet you 20 pushups that it’s 45% or less! You’ve got to accept the bet since I’m giving you a 5% buffer.” I retorted.
Secretly, I was thinking McGill’s acceptance rate was closer to 20%. By comparison, the best universities in America have single digit acceptance rates.
“You’re on!” My student immediately looked up McGill’s acceptance rate on Google and started to dance.
McGill University Acceptance Rate
He showed me his phone and Google had the acceptance rate at 46.3%. “Time to do some push-ups coach!“
Never one to surrender so easily, I looked at the data closely and the 46.3% acceptance rate was from 2016. As someone who is proficient with the search engines, I knew Google often had old data in its featured snippets.
Once I clicked on McGill’s website, it showed they made 15,385 offers to 37,505 applications for a 41.7% acceptance rate for the 2018 school year.
“Bahaha, never challenge the coach! 20 pushups right now!” I boomed.
A 41.7% acceptance rate for arguably the best university in Canada is comical by US standards for the top school. Does everybody get a participation trophy in Canada too? The high acceptance rate shows that Canadians really are much more accepting of everybody than we in America.
Thankfully, we didn’t make the bet in late 2020. If we did, I would have lost! The latest stats for Fall 2020 admission show an even higher acceptance rate at McGill. The university made 17,385 offers out of 35,505 applicants for an astounding 49% acceptance rate!
Conversely, the Harvard of Harvard has an acceptance rate of about 5%. If your kids are academically mediocre, then it is much wiser to at least apply to a university like McGill. The career paths of many university graduates tend to end up at the same place.
Acceptance Rates From Other Top Canadian Universities
Let’s say you disagree that McGill is the best university in Canada. Here are the acceptance rates for the other top universities in Canada.
- University of British Columbia: 52.4% acceptance rate
- Queen’s University: 42% acceptance rate
- University of Toronto: 40% acceptance rate
- McMaster University: 58.7% acceptance rate
- University of Waterloo: 52% acceptance rate
- University of Montreal: 57% acceptance rate
In other words, the best universities in Canada have an acceptance rate of 40% – 58.7%!
And one reader even mentioned that Concordia University is supposedly one of the best universities. If so, that’s great because Concordia University has about a 73% acceptance rate!
Acceptance Rates At The Top U.S. Universities
Now let’s take a look at the acceptance rates of some of the top U.S. universities.
Good luck getting into a top 10 school in America. It is nearly impossible. And if your kids are Asian, like mine are, then they’ve really got a Mt. Everest to climb. Is there no wonder why so many Asian families run small businesses? They know their odds are stacked against them, so they do what they can to take care of their own.
Unless you’re a really rich legacy student or cured malaria while fighting against gun violence, you have little chance of getting into a top American university.
Remember, even some rich celebrity kids couldn’t get in on their own merit. Therefore, what makes you think your kids can get in? If you don’t have $500,000 in bribe money lying around, then forget about it.
What is the point of trying to grind so hard in middle school and high school to try and get into a top American university with a 10% or lower acceptance rate? Instead, you can be an average student and still get into a top-five Canadian university!
The reputations of the top Canadian universities are higher than their respective acceptance rates indicate. And many consider the top Canadian universities to have a similar amount of prestige to the top American universities.
The best life hack helps get your kids into a great school and ultimately get better jobs.
The Pressure For U.S. High Schoolers Is Immense
Over the past three years, I’ve seen and overheard my students talk incessantly about their studies. They discuss how they need to go to expensive SAT tutoring after practice. They complain about having to take more practice AP exams and so forth.
Several even showed up late to important matches because they required extra time on their exams. They then wanted to talk to their teachers after. I could feel the pressure they were under to try and do it all.
Maybe the pressure cooker environment has always been there in high school. But is it really a necessary rite of passage given college is becoming less necessary thanks to the free internet?
Instead of spending $48,000 in annual tuition going to Harvard only to end up with the same type of job as everyone else, why not spend 1/9th the annual tuition at University of British Columbia and work at a US-based firm for more money instead? You might have to live in Canada for a year or two to be able to pay Canadian tuition, but it’ll be worth it!
Even if you cannot get any tuition exemption, international tuition is still about $10,000 cheaper than a comparable top rated private university in America.
Not only might you land a $120,000 computer engineering job at Zillow, but you might also even make more than $1,000,000 a year as an MD at Goldman Sachs by your early 30s!
Best Life Hack: Time To Move To Canada
The best life hack is to take advantage of Canada. I encourage all American high school students to apply to Canadian universities to get a great education and save on cost. Then once you’ve accumulated enough capital in America to retire, you can then return to Canada to live off the government’s good graces.
Having a Canadian university education should make it easier to be accepted by the Canadians. You don’t even need a job thanks to Canada’s Express Entry program. All that’s required is at least one year of work experience, proficiency in English or French, and $1,500 – $2,000.
If you intend to be self-employed when you move to Canada, you’ll need to show you have at least two years’ relevant experience in the field in which you intend to self-employ.
But once you get to Canada, there’s no law that states you need to start a successful business. You can just be a hobbyist to keep yourself engaged.
At the end of the day, Canada is great for early retirees, people seeking financial independence, entrepreneurs, and children. Canadians are more laid back as its citizens are more focused on work-life balance.
When it’s time for my family to choose between relocating to Hawaii or Canada, it may be a harder choice than I had initially imagined. But then again, with Joe Biden as President, perhaps he’ll turn the United States more into Canada and we won’t have to leave. Therefore, my preference is still for Hawaii.
Taking advantage of Canada truly is the best life hack for Americans. Who’s with me? Go Canada!
Best Wealth Hack
Now that you know the best life hack, know about the best wealth hack. Stay on top of your overall finances by signing up with Personal Capital. PC is a free online tool I’ve used since 2012 to help build wealth. Before Personal Capital, I had to log into eight different systems to track 35 different accounts.
Now I can just log into Personal Capital to see how my stock accounts are doing. I can easily track my net worth and spending as well.
Personal Capital’s 401(k) Fee Analyzer tool is saving me over $1,700 a year in fees. Finally, there is a fantastic Retirement Planning Calculator to help you manage your financial future.
Best Investment Hack
Real estate is a core asset class that has proven to build long-term wealth for Americans. Real estate is a tangible asset that provides utility and a steady stream of income if you own rental properties.
Given interest rates have come way down, the value of rental income has gone way up. The reason why is because it now takes a lot more capital to generate the same amount of risk-adjusted income. Yet, real estate prices have not reflected this reality yet, hence the opportunity.
If the U.S. housing market ever gets as hot as the Canadian housing market, I expect U.S. real estate prices to go up another 30% – 75%.
Take a look at my two favorite real estate crowdfunding platforms.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eREITs. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most investors, buying a diversified eREIT is likely the best way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot of capital, you can build your own select real estate fund with CrowdStreet.
Both platforms are free to sign up and explore. I’ve personally invested $810,000 in real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America.
The Best Life Hack For Americans is a Financial Samurai original post. Another related post is: What If U.S. Home Prices Get As Hot As Canadian Home Prices?
Hi
I live in Iran and I am a small business owner making 130,000$ tax free net income and I have 93% saving rate.
Recently I am thinking to move to Canada, do you think it’s a wise move?
My business is online and I can do the same in Canada, but my expenses will jump and I think I can’t have more than 50% saving rate. But maybe I can double or triple my revenue? as Canada is much better is terms of ease of doing business.
what do you think?
Looking for your answer
Sam, you are 1,00000% spot on with this post. I am a dual US/Canadian citizen, born and raised in FL and at the age of 29 moved up to Canada. We are now an early 30s FIRE family living that sweet sweet life you described in your post. Most people look at me like I’m crazy when I say I willingly moved from the Sunshine State to the Great North but man Canada really is an early retirees dream country!
Since moving up here, we have experienced several major hospital visits (pregnancy, major car accident, meningitis) and all we have ever had to pay for was hospital parking… so maybe $35?? And of course, regular doctor visits are covered too.
And my partner took off 18 months of parental leave with our first kid in 2018 and I’ll be doing the same here in a few months when baby 2 arrives.
And (yes, more to add) – we have this sweet little thing called Canada Child Benefit. It is meant for low income families but young FIRE families also benefit from this. Rather than withdrawing $47,000 from our investment portfolio each year, we can knock that down to $30,000 annually and receive over $17,000 of TAX FREE income as a family with 2 kids. I would never ever bank of external assistance in our FIRE plans and rather view this as icing on the cake. That’s a major win to lowering your withdrawal rate.
And to add a little extra sugar to the package, in Canada the near equivalent of a 529 is called an RESP (Registered Education Savings Plan). Each year, the government will match up to 20% of your contributions up to $500 a year (for an annual life time max of $7,200). Meaning if you contribute $2,500 the gov throws in $500. That’s an INSTANT 20% return!! And as you’ve illustrated above with the cost of tuition, that $7,200 max benefit is equivalent to a free year of education. Our 3 year old already has 2 years of her education paid for simply by contributing $2,500/year into it so far.
Canada for the win!
Sounds like a win to me! Thanks for sharing your story. Tax-free income is so nice.
As a family who has lived in Switzerland since 2013, we have accidentally done just what you describe here. The financial benefits and quality of life are in many ways superior – IF you can straddle and make the best of both worlds (US vs abroad). This is NOT easy – I think you have grossly oversimplified the logistics and financials of just such a plan. Not to mention the incalculable value of family relationships which will suffer. You have also assumed the feasibility of just such a plan. Most countries see immigrants (which is what you are proposing becoming) not necessarily in a positive light, and getting (and keeping) a residency permit is not always so easy. The US is not the only country whose people are hostile towards immigrants and claiming that foreign residents are taking their jobs, and causing all kinds of economic and social problems.
Moreover, if it’s good, affordable health care, education, and livable wages and housing you seek, shouldn’t you be advocating for that at home? Or becoming a tax-paying, contributing member of your adopted society? It seems hardly fair to game the system to your advantage. In fact, I find that morally wrong and corrosive to both the country you left, and the country whose systems you seek to exploit.
Canada is incredibly immigrant friendly. Check out their policies.
“In fact, I find that morally wrong and corrosive to both the country you left, and the country whose systems you seek to exploit.”
How did you get over being morally wrong when you arrived in 2013? I think at the end of the day, people rationally do what’s best for themselves.
Perhaps I misunderstood but you seem to suggest not paying into the system, or becoming a real member of the community. We pay dearly into the system here-the swiss take full advantage of transient high-wage earners who pay in, leave, and never get to collect. And, as I stated we “accidently” (and recently) found a way to make a foot in both lands work to our advantage. Again, not easy but to your point possibly very worth while to do for the many valid reasons you outlined. I am not labeling you as morally wrong, but not contributing to your community as wrong. Advocating and taking advantage of policies yet not voting for or being willing to pay for them is my point. I have no idea if you are personally taking or not taking these actions, just that the overall tone of your argument left that taste in my mouth.
Interesting points to ponder nonetheless.
I guess I’m confused where you were coming from. Where were you living before you arrived in Switzerland to take advantage of its benefits since it sounds like you are in a similar position in this post highlighting how Americans can take advantage of Canadian benefits just like how tens of thousands are taking advantage of American jobs that pay much higher.
I can’t be morally wrong because I still live in America and pay plenty of taxes. I might even be considered a good citizen for paying way more in taxes than I consume in benefits.
I’m just wondering if you are not from Switzerland, how YOU were able to overcome being morally wrong in the way you say when you first arrived in Switzerland.
Thx
A great article Sam of a very timely topic during a unique time in American history. I’ll relate my experiences as a person in their mid-eighties from a different time period of the American Dream. I was able to work my way through college (Duke) and grad school in the 60’s when everything was possible for two thousand dollars a year including room and board. Fortunately, my career as a college teacher and another as the owner of an Adventure Travel Company allowed me to retire in my mid-fifties and enjoy nearly 30 years of retirement by traveling, volunteering, and working abroad and in the USA. I assumed that my wife and I would always end up in the USA, but that was before Trump. If Biden had not won the election, I figured I would be heading towards British Columbia and spend the rest of our years there. My grandparents are from Quebec and my daughter had strongly considered McGill University for Medical School. But she decided on George Washington University and has enjoyed a wonderful medical career in California.
A few months ago, I did research the possibilities of a retired person of moderate means moving from the USA to Canada. Having traveled there a number of times over the years and also treated in their hospitals, I have always enjoyed the country, people, and social programs. But the more I researched and compared what I had as a retiree in America, the more I realized that it would cost me significantly more to live in Canada even if I was accepted as a permanent resident. My health costs under Medicare are less than $100 a month including prescriptions, gym fees, and doctor visits. Hospital fees could increase that figure. Having had large homes in the past, we now enjoy a small but cozy apartment on a golf course for $1200 a month in Oregon, and we rarely pay taxes. When I travel in B.C., it has been my experience that with added taxes, gas prices, groceries and rent, we would have to spend an additional 30% for daily living costs. It’s easy enough to have our Social Security transferred from my bank here to an account there. Of course, I would not be eligible for their retirement programs. I will say that I think the medical system in B.C. is outstanding, very user friendly and about 60 percent less than hospital costs in the USA.
In the end, I realized that I couldn’t afford to retire to Canada, but I could travel there up to six months a year, which is what many Canadians do in America as they spend five to six months of winter in Palm Springs, Arizona or Florida. Thank God Biden won the election and many of the social programs many of us desire, may take place over the next four years. Canada is a country for the younger set and I definitely would consider moving there for college and work if I was in my late teens and twenties.
Thanks for sharing your journey David!
“But the more I researched and compared what I had as a retiree in America, the more I realized that it would cost me significantly more to live in Canada even if I was accepted as a permanent resident. My health costs under Medicare are less than $100 a month including prescriptions, gym fees, and doctor visits.”
Great insights, as a lot of people believe it is the opposite. I believe this is the income limit to receive Medicare:
To qualify, your monthly income cannot be higher than $1,010 for an individual or $1,355 for a married couple. Your resource limits are $7,280 for one person and $10,930 for a married couple. A Qualifying Individual (QI) policy helps pay your Medicare Part B premium.
FS, the limits you mention are for Medicaid, not Medicare. Any legal resident/citizens over-65 who has worked for at least 10 years are automatically eligible for Medicare (or will have access via spouse).
Low income people who are Medicare eligible and also eligible for ‘extra help’ or even full Medicaid get additional assistance covering Medicare part B premiums, copays, and most drug costs
Right on. Good to know. So is Medicare affordable?
How would a $2,300/month family of 4 gold plan translate to Medicare monthly cost you think?
Sam, Since you’re looking for arbitrage opportunities to help readers make more money and live better lives, have you heard of the Dutch American Friendship Treaty? It makes obtaining a residence permit in the Netherlands as an American very easy. You will need €4,500 to “invest” and maintain in a business bank account and to jump through some bureaucratic hoops. After having your Dutch-American Friendship Treaty Visa for 5 years, you may apply for a permanent residence permit or you may apply for Dutch citizenship.
A friend of mine moved from Canada to the Netherlands in 2000 without any knowledge of the Dutch language and is still enjoying life there with no desire to move back to North America.
Some thoughts for your readers, as a Canadian.
I’m not sure that you’d get the lower tuition costs as an American.
For example, foreign exchange students pay much higher costs than local students and I would presume the same for Americans.
While “acceptance rates” are high, they’re not indicative of program specific rates.
To get into the business school of many of these universities is challenging and requires a high GPA and a lot of work. We aren’t talking a bottom 10% of students, rather, a top 10% – 20%.
Similarly for other competitive, in demand, programs. It is not easy for Canadian students to get into any University of their choosing nor, more specifically, program of their choosing.
It’s already too cold for me in Portland. I want to go south, not north.
But Canadian universities sound like a good plan. I’ll have to keep that in mind when our son is ready for college.
It only works if you are able to get the local rate, so you’d have to move here early and get landed immigrant status likely.
timeshighereducation.com/student/advice/cost-studying-university-canada
Thanks. The link was good information. FS can sometimes make outlandish propositions witbout digging deeper into the nuances of those propositions. And as a blog, I think that is fine because being a bit sensationalist has help Sam build his brand (not unlike those in the the political sphere). But for international students seeking a Canadian college education it would range $20-30K (based on decent income-earning majors), this certainly becomes much less desireable than an in-state school.
$20-$30K is still much cheaper than $50K tuition for private schools in America.
I don’t understand why a Republican would move to Canada where the government subsidizes or totally pays for so many programs.
Because it’s human nature to want some thing for free, regardless of which party you are a part of. And if you care about your children, you want them to get ahead. And one way to get ahead is by competing with less competitive people.
Sure but, that has nothing to do with moving to Canada because Biden beat Trump.
I’m not sure I understand. Can you please elaborate?
I do write in the post that Biden might make the U.S. more like Canada, which would reduce the urge of Americans moving to Canada.
I was under the impression that your article was written on the premise that since Biden won and Trump lost, those unhappy with that fact are wanting to leave the US and move to Canada. My point is, why would a Republican want to do that when so many programs in Canada are heavily underwritten or totally paid for through taxes. Isn’t that why these people are Republicans and not Democrats? Isn’t that their problem with a Democrat being elected?
I’m not taking a side one way or the other but, doesn’t Canada have a more socialist and less “free market” relationship to healthcare and education than the US? Again, I don’t understand why Trump losing would make Republicans want to move to Canada?
Exactly, Canada is socialist, Trumpsters will have to move to a totalitarian white country, maybe Hungary or Russia?
By the way, I’m not trying to be difficult, Sam. I love your site and have the highest respect for you. I agree with all of your selling points on Canada myself although I’m not inclined to leave the U.S.. I just don’t understand why someone pissed off enough over Biden’s election to want to move out of the U.S. would want to move to an even more socialistically oriented and run country which Canada is.
Sam, I may have gone overboard on my last comments, not out of anger just got a little wordy trying to explain why I found it odd that this article would start out as being pertinent to someone unhappy with Biden winning and Trump losing. Please feel free to skip posting the last one or two of them if you want.
But nothing is free. Either you pay for it yourself and have choices, or you give the government your money(taxes) and they make the decisions for you.
Sam,
What about the process to actually move to Canada? Will they accept retired (FIRE) people? From what’s been said, it’s difficult if you’re working and ‘may’ take a job from a working Canadian…
But what about people already retired? Will they accept us? Can I get my SS there? What about my pile of US funds, invested over the years… transfer it to Canadian Banks, and see the balance grow by .23% (giving a false sense of Greater Wealth?).
Over the years, I’ve traveled through many areas of Canada, (Kelowna, Vancouver, Toronto, Edmonton, etc.) and found it to be very welcoming and diverse… but could I actually move there?
Steps and processes?
Acceptance Rates?
Costs?