The lowdown on registered disability savings plans

Dear Money Lady Readers,

I often write about government-assisted programs, and today I would like to discuss registered disability savings plan accounts. Did you know that in 2022 a Statistics Canada survey reported that 27 per cent of Canadians aged 15 or older have at least one disability limiting their daily activity? That’s 11.1 million Canadians with disabilities. As of 2024, about 16.8 per cent of Canadians with disabilities live in poverty – a rate nearly double that of the general population. So, what’s available to help?

RDSP accounts have been available since 2008, however, just 17 per cent of Canadians today are aware of it. This lack of awareness is a huge missed opportunity for Canadians with disabilities, as they may be missing out on government support worth up to $90,000.

To start, let’s look at eligibility. The RDSP account is available to Canadian residents with a SIN who are eligible for the disability tax credit and are 59 years or younger. If you have a medical condition, but haven’t yet claimed the disability tax credit, speak with your medical practitioner to explore your eligibility – it’s the first step to opening an RDSP, after which you can begin learning about the benefits available to you in the plan.

There are two key incentives in an RDSP for individuals aged 49 or less. First, the Canada disability savings grant is a matching grant of 300, 200 or 10 per cent of an individual’s contributions, depending on the beneficiary’s family income. Individuals can receive up to $3,500 in matching grants each year, and up to $70,000 over their lifetimes.

The second incentive is the Canada disability savings bond, through which the government will pay up to $1,000 a year to low- to modest-income families, even with no contributions. The lifetime bond limit is $20,000 and can be received until the year the beneficiary turns 49. If you open a RDSP later in life, you can still get access to the bonds. If you meet the eligibility requirements, carry-forward regulations allow individuals to receive unused grant and bond entitlements from previous years, up to a 10-year period, on or before the year individuals turn 49.

Among all Canadians surveyed in a Concentra Trust survey, fewer than one in five were aware of the RDSP. People with disabilities and/or their caregivers should consider opening RDSP accounts – the sooner the better. Like all registered investments, they need time to grow. Compound interest and time could make the difference between aging without assistance in isolation or having future monetary security.

Adapting to life with any disability can be challenging, which makes it even more important to find ways to help yourself cope with limitations, overcome challenges, and build a rewarding life. You need a plan for your future and that should start with an RDSP.

So, where do you open an RDSP? You can open them at many financial institutions, including credit unions which are often closely involved with their communities. Concentra Trust, which partners with over 200 Canadian credit unions to facilitate awareness of the RDSP for Canadians, can also help you open an RDSP. Remember, more knowledge means more choices, more power, and more certainty for your future. Something we all need.

If you think you or someone you love may benefit from an RDSP, read more at: https://www.concentra.ca/?utm_source=moneylady&utm_medium=article&utm_id=rdsp