Planning for retirement can sometimes feel like an overwhelming task. As an adult with a disability, there’s already so much to consider – deciding whether you want to further your education or find a job, volunteering with the community, navigating relationships, having secure and affordable housing, making sure your disability needs are accommodated, and spending time doing what makes you happy. That’s why we provide free support — to give you the tools and information you need to plan for your financial future so that you can focus on being you!
Once you reach the year you turn 18, the Disability Tax Credit (DTC) can provide tax deductions for yourself or to transfer to an eligible family caregiver. The DTC can also be claimed retroactively going back as far as ten years!
Outside of the tax benefit, the DTC opens up the door to many other benefits, including the registered disability savings plan (RDSP). The RDSP is a long-term investment savings plan that the government will contribute up to $90,000 towards in the form of grants and bonds. These grants and bonds can also be claimed retroactively as far back as ten years, up to the end of the year you turn 49.
The RDSP can also hold up to $200,000 in personal contributions, earn unlimited investment income, and is completely exempt for all federal and most provincial/territorial disability and income assistance programs!
Briar is currently 24 years old and has been approved for the DTC since age 22. They work part-time and earn about $32,000/year including their disability income assistance payments. Briar learns about the RDSP and opens it up with their trusted financial professional. They are able to contribute $125/month to the RDSP, which works out to $1,500/year.
Briar is able to receive the full $20,000 in government bonds for low-income folks by the year in which they turn 41. They keep contributing and receive the full amount of grants when they’re 43. Briar decides to keep contributing to their RDSP until age 54 and then starts taking withdrawals from their RDSP.
By age 54, Briar’s RDSP is worth $379,435.08. Their yearly payment from the RDSP is a minimum of $13,083.97 and they will receive this up until the year they turn 83 when all of the funds have been used.
Kendi is 37 years old and has been blind since birth. She was not aware of the DTC or RDSP until her home share provider told her about it after participating in a free webinar on the topic. Kendi immediately schedules an appointment with her optometrist to complete the DTC application. By age 38, Kendi has been approved for the DTC and decides to open an RDSP.
She has been working part-time for most of her adult life and her finances are extremely tight, so she’s only able to deposit $25/month into the RDSP. By age 47 she has received the maximum $20,000 in bonds just by having the account open. With the contributions that Kendi has been able to make, she receives $10,800 in grants by the end of the year she turns 49.
When Kendi is ready to start taking withdrawals in the year she turns 60, there is $92,288.57 in her RDSP. This means that she will receive at least $4,012.55 every year until she’s 83.
*All scenarios were calculated using the RDSP Calculator at rdsp.com/calculator. The investment strategy chosen before withdrawals begin is moderate at 5%. The investment strategy chosen after withdrawals begin is conversative at 3%.