The RDSP: Do you have yours?
Even though I can’t make full use out of the Registered Disabilities Saving Plan (RDSP) myself, and thanks to the increase in asset limits within Person with Disability (PWD) benefit has somewhat decreased the need to open the RDSP, I still believe that the Registered Disability Savings Plans is extremely important, and something that everyone who is legible for it should have.
One of the things that I find really amazing regarding the RDSP is how few people with disabilities have opened one. According to the Federal Government there are over a million people eligible to open an RDSP account yet less than a hundred thousand have done so.
To me this is almost criminal. One of the most revolutionary programs to come into being to help people with disabilities and assure that they have a higher quality of life in the future and less than 10% of the population has taken advantage of it.
So here are one important clarification and two reason why everyone with a disability should at least try and open an RDSP account.
The RDSP and PDW
Okay let’s deal with the biggest fear in the room for most of you. Having a RDSP will in no way effect your PDW. Contributing to your RDSP will in not way effect your PDW. Other people putting money into your RDSP will in no way effect your PDW. And most importantly when the time comes withdrawing money from the RDSP will IN NO WAY effect your PWD. If you have heard differently from other people (including financial aid workers) they are simply wrong. In fact, the provincial government wants people to open these accounts and offers a cash incentive for disabled people on PWD to do so. Bluntly you can have both RDSP and PWD and the provincial government will be okay with it.
Perhaps the single biggest reason to open an RDSP is the $90,000 of free money from the federal government that is available to people over time. Can only afford to put in a small amount (say $25 a month) into your RDSP? Fine; the government will deposit three time that into your account. Suddenly that $25 a month is $100 a month. Which by the way is as much as a lot of people put into the retirement saving plans.
Can’t afford to put any money into an RDSP account? People who are currently making less than $25,000 will have the government deposit $1,000 into their RDSP accounts every year for twenty years (or until the person with the disability turn 50 whichever comes first). This $1,000 will be deposited even if you put NO MONEY into the account otherwise.
It’s your money
One thing that is often missed is by many in both the financial and disability fields is that when it comes time start spending money from the RDSP no one can tell you what you can and can not spend that money on. It’s your money! Not the government’s, not your service provider’s, not your families, it’s yours. Want to spend it on a trip go ahead. Want to retrofit a house to live in, okay. Want use the money to hire a family member to get you up in the morning that’s okay as well. In a way, the RDSP is true individualized funding, but without the need of settling up your own not for profit business.
Just as importantly, money withdrawn from the RDSP will not negatively impact the potential funding that a person with disabilities can receive from other government agencies including Person with Disability Benefits (I know I am repeating myself but this part is really important). This means you could get say $1,000 a month from your RDSP (or $12,000 a year), not only will you get your full monthly PDW cheque, BUT you will also still be able to earn $9,600 a year without penalty. So go ahead and dream because if you’ve got the monies inside the RDSP you can make it happen.
So if free money from the government, along with what you put into the plan and the growth on both of these sources are fully under your control don’t interest you in opening an RDSP; I’m not sure what will. Is the RDSP easy to set up? Yes and no; its easy to get started, but in order get the RDSP working effectively for you need to put some time and effort into it. You need to talk to a financial professional who can take you through the steps of setting up and using the RDSP to invest in your future. But don’t stop there: Anyone who will be impacted by your financial well being should know about that your opening an RDSP. Plan things out with your support network so when the time is right you will have the funds to make a real impact in your life.