COLUMN: Ask the Money Lady – Registered disability savings plans

Dear Money Lady Readers:

I often talk about government assisted programs but today I would like to discuss Registered Disability Savings Plan (RDSP) accounts. Did you know that in 2022 a Statistics Canada survey reported that 27 percent 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 percent of Canadians with disabilities live in poverty – a rate that’s nearly double that of the general population. So, what’s available to help?

The RDSP account has been available since 2008, however, just 17 percent of Canadians today are aware of it. This lack of awareness is a huge missed opportunity for Canadians with disabilities to secure their long-term financial future, 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 don’t have the DTC, 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 percent, 200 percent or 100 percent of an individual’s contributions, depending on the beneficiary’s family income. An individual can receive up to $3,500 in matching grants each year, and up to $70,000 over their lifetime. The second 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. As long as you meet the eligibility requirements, carry forward regulations allows 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, less than 1-in-5 were aware of the RDSP. Individuals with disabilities and caregivers should consider opening an RDSP account, and 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 and increased health risks, to having future monetary security.

Adapting to a life with any disability can be challenging, but that makes it all the 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 an RDSP at many financial institutions, including credit unions that 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, you can read more at: https://www.concentra.ca/?utm_source=moneylady&utm_medium=article&utm_id=rdsp

Christine Ibbotson is a Canadian finance writer, radio host & YouTuber. For more advice check out her YouTube channel: ASK THE MONEY LADY – Your Canadian Finance Coach.