Planning for Retirement: Why Americans Need More Than Canadians

When Americans think about retiring, the numbers can feel daunting. Recent data shows that the average American believes they’ll need approximately $1.8 million to achieve a comfortable retirement, while their Canadian counterparts estimate needing around CA$1.54 million—roughly $1.07 million USD. But why this gap? The answer lies in three critical areas that define retirement security in each country: healthcare access, housing markets, and everyday living expenses.

The Healthcare Factor: A Major Difference

The divergence between American and Canadian retirement needs starts with healthcare. In the United States, Medicare provides baseline coverage but leaves significant gaps. Retirees typically face substantial out-of-pocket expenses through insurance premiums, deductibles, and co-pays. The average annual health insurance premium for Americans ranges between $7,000 on the ACA marketplace to nearly $9,000 for employer-sponsored plans. Long-term care adds another substantial drain on retirement resources.

Canada’s publicly funded healthcare system tells a different story. While basic medical expenses are covered by the government, supplemental insurance—covering dental, vision, and podiatry—remains optional. The contrast is striking: a 35-year-old Canadian male can secure comprehensive private insurance for roughly CA$700 annually, or about $488 USD. This structural difference alone explains a meaningful portion of why Americans need to accumulate greater retirement savings.

Housing: A Tale of Two Markets

Real estate represents one of the largest expenses throughout retirement. Canadian home prices average around CA$713,700 (approximately $498,800), though Toronto and Vancouver command significantly higher prices, while smaller provinces offer greater affordability. In the United States, the median home value stands at $357,138, creating an interesting paradox: American properties cost less upfront, yet overall retirement housing expenses often run higher due to property taxes, maintenance, and insurance in many states.

For those renting rather than owning outright, monthly costs in the U.S. average $2,085, compared to CA$1,799 (around $1,256) in Canada. Retirees seeking lower-tax states like Pennsylvania or Iowa may find more affordable options, while other regions drive up expenses considerably.

The Cost of Daily Living

Beyond the major expense categories, everyday costs paint another picture. Food, transportation, and routine expenses create the baseline of retirement budgeting. According to living cost analyses, Canada proves 21% less expensive for basic living—an average of $1,980 monthly per person versus $2,498 in the United States.

The Reality for Both Countries

Despite differences, anxiety about retirement adequacy appears universal. More than three-quarters of Canadians worry about depleting their savings, with 63% citing inflation as a primary barrier to adequate retirement preparation. Americans face similar pressures, compounded by healthcare uncertainties.

The path forward for retirees in both nations increasingly involves strategic choices: some delay retirement, others trim their lifestyle expectations, and many supplement retirement income through part-time work. Understanding these cost differentials—particularly healthcare’s outsized impact in the U.S.—helps Canadians, Americans, and even cross-border relocators make informed decisions about whether they can actually retire, and where it makes most financial sense to do so.