Thursday 10 January 2013

Register Disability Savings Plans

We went to a presentation last night on Registered Disability Savings Plans, which is a fairly new alternative the government is offering to help families and individuals with a long term disability.

Basically, the plan recognizes that, however unfair it may be, people with physical and mental challenges tend to both have more expenses than typical and be able to earn less than typical over their lifespan.  The RDSP allows families to save money for their children's retirement and long term needs.

Initially, this was touted as a means of providing care (which implied it could be used at any time for therapy, etc.) but since there are severe penalties for accessing it before the beneficiary turns 59, that's clearly not what it's meant for.

Overall, it's a good idea.  With over a half a century of interest, I'm fairly certain we should see some good returns on our investment.  The government promises that money from an RDSP won't count as "income" when calculating other benefits.  (I'm not counting on that, too many other programs will come and go and change in the next 50-75 years before Alex can collect.)  As an incentive, they offer fairly decent matching grants where they'll match you dollar for dollar up to the first thousand dollars regardless of income.  Low-income families can do even better than that.

There are some limitations which will keep it from being too useful.  There's a lifetime contribution limit of $200 000.  That strikes me as a very small number for having to provide for someone throughout old age.  Even with interest, it means this can't be your only support.  There are also some strange conditions on how they want the money withdrawn and when it can be withdrawn.  For example, if you withdraw it before the beneficiary is 59, you lose the last 10 years of government matching.

It's something parents should think about.  After almost six years of therapy, we know Alex will likely need some support throughout his life.  What level, we don't know.  It may be that he can get by with someone checking on him periodically or he may need more constant supervised care.  Our goal is still to have him live as independently as possible with as minimum a supervision level as possible and I don't intend to give up on that.

But realistically, if I wait until I'm sure, that costs him a lot financially.  I may have a good idea what his long term needs will be when he's 30, but by starting now, he's got 21 years of contributions and interest to draw on.

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