Unlocking Financial Security for the Disabled: Your Guide to Registered Disability Savings Plan (RDSP)
- Antony John Paul
- Apr 6
- 5 min read
Updated: 6 days ago
Navigating the Canadian financial landscape can be complex, especially when managing the unique circumstances that come with a disability. Whether you're new to Canada or have lived here for years, understanding the available support systems is crucial for building a secure financial future for yourself or your loved ones.
The Registered Disability Savings Plan (RDSP) has been around since 2008, created to help individuals eligible for the Disability Tax Credit (DTC) save and invest for the future. Despite its value, awareness of the RDSP remains surprisingly low. According to a recent survey (Dec 2024) by Concentra Trust, only about 1 in 6 Canadians—or roughly 17%—are familiar with the RDSP. In comparison, awareness of Tax-Free Savings Accounts (TFSAs) sits at 86%, and Registered Retirement Savings Plans (RRSPs) at 81%.
At AJ Wealth Management, we believe that every Canadian deserves a secure financial future—including those living with severe and prolonged disabilities. That’s why we’re passionate about helping families access powerful tools like the Registered Disability Savings Plan (RDSP). These aren't just acronyms; they are vital tools designed to provide financial relief and long-term savings opportunities.
This post will demystify the RDSP, explaining what they are, who is eligible, and why they are so important. Most importantly, we'll show you how expert guidance can make accessing and maximizing these benefits a smooth process.
What is a Registered Disability Savings Plan (RDSP)?
The RDSP is a long-term savings plan created by the Government of Canada to help people with disabilities build retirement savings. Eligible individuals can receive up to $90,000 in government grants and bonds, with total contributions (from the individual, family, or friends) capped at $200,000.
Key Benefits of an RDSP
Free Government Money
Canada Disability Savings Grant (CDSG): Matches personal contributions up to $3,500/year (max $70,000 lifetime).
Canada Disability Savings Bond (CDSB): Provides up to $1,000/year (max $20,000 lifetime) with no contribution required.
Tax-Deferred GrowthContributions grow tax-free until withdrawal. Personal contributions are not taxed upon withdrawal.
Asset ExemptionRDSPs are not counted as assets for most federal, provincial, or territorial income assistance programs.
Flexible WithdrawalsMoney can be used however the beneficiary chooses. Withdrawals can start penalty-free at age 60, though early withdrawals may be allowed under certain conditions (e.g., shortened life expectancy).
RDSP Eligibility
To qualify, an individual must:
✔ Be eligible for the Disability Tax Credit (DTC)
✔ Have a valid Social Insurance Number (SIN)
✔ Be a Canadian resident for tax purposes
✔ Be 59 years old or younger
What is the Canada Disability Savings Grant?
The Canada Disability Savings Grant is a matching program offered by the Government of Canada to help individuals with disabilities—and their families—save for long-term financial security. When you contribute to an RDSP, the government may contribute even more. Think of it as free money to help build a better financial future.
How Does the Grant Work?
The grant is income-tested and matches contributions to an RDSP at 100%, 200%, or even 300%, depending on family income and the amount you contribute each year.
Here’s how the numbers break down:
If your family income is $114,750 or less, the government will:
Match the first $500 at 300% ($1,500)
Match the next $1,000 at 200% ($2,000)
That’s a potential $3,500 in grant money each year!
If your income is above that threshold, you’ll still receive 100% matching on the first $1,000 in contributions, for up to $1,000 per year.
Over a lifetime, the government can contribute up to $70,000 in grants to your RDSP. The key? Start early! Grants are only available until the end of the year the beneficiary turns 49.
Who’s Eligible?
To receive the grant, the beneficiary must:
Be eligible for the Disability Tax Credit (DTC)
Be a Canadian resident
Have a valid Social Insurance Number (SIN)
Be under 50 years old
Three Key Components: Contributions, Grants, and Bonds
One of the most attractive features of the RDSP is the Canada Disability Savings Grant (CDSG) and Canada Disability Savings Bond (CDSB)—government incentives that can significantly amplify your savings.
Component | Details |
CDSG (Grant) | Up to $3,500 annually for families with income ≤ $114,750 (2025 figures). Maximum lifetime grant: $70,000. |
CDSB (Bond) | Up to $1,000 annually for low- to modest-income families. No contributions required. Maximum lifetime bond: $20,000. |
Contributions | Lifetime contribution cap: $200,000. No annual limit. Contributions can include cash, GICs, mutual funds, and more. |
Even better, Canadians approved for the DTC can “catch up” on missed grants and bonds for up to 10 years, allowing a retroactive boost in funding.
What About Family Income?
Family income is an important factor—it determines your grant match rate. But here’s the twist: the income used to assess eligibility is from two years prior. That means:
From birth to age 18, it’s based on the primary caregiver’s income (usually the parent or guardian).
From age 19 onward, it’s based on the beneficiary’s personal income (and their spouse’s, if applicable).
To qualify for the maximum grant, ensure taxes are filed each year—even if there’s no income!
Real-World Examples
Example 1: Income Under the Threshold If you contribute $4,000 and your family income is $45,000, you’d receive the full $3,500 in grants:
$500 at 300% = $1,500
$1,000 at 200% = $2,000
The remaining $2,500 won't receive additional grants this year
Example 2: Income Over the Threshold If your family income is above $106,717 and you contribute $5,000, you’ll receive a $1,000 grant:
$1,000 at 100% = $1,000
The rest won’t be matched, but your savings still grow tax-deferred!
Example 3: No Income Info Available If no tax return was filed (e.g., a new 18-year-old beneficiary), the default match is 100%:
$1,000 in contributions = $1,000 grant
Opening a Registered Disability Savings Plan (RDSP) is a big step toward securing long-term financial stability. While getting the account set up may take some time, once your RDSP is active and contributions are made, the next important step is deciding how to invest the money for the future.
Think Long Term
An RDSP is designed for long-term savings, and it's important to treat it that way. In fact, if you withdraw funds too early, you may have to repay some of the government grants or bonds. That’s why it’s ideal to plan for a minimum 10-year time horizon—though many families may be looking at 20 to 30 years or more. The longer your money stays invested and growing, the more powerful the impact over time.
Diversification is Key
To make the most of your RDSP, consider a diversified, professionally managed portfolio that includes both stocks and bonds. Diversification helps your investments weather market ups and downs, while still aiming for long-term growth.
Avoid the temptation to keep your RDSP in cash or low-interest savings products. These often don’t even keep up with inflation—meaning the real value of your savings could shrink over time. (Think about how much more a cup of coffee costs today than it did 20 years ago!)
Get Professional Advice
Working with a qualified investment professional can help you make the most of your RDSP. Not only can they help you choose the right investment mix, but they’ll also ensure your RDSP fits within your broader financial goals and estate planning.
Withdrawals & Flexibility
Withdrawals can begin after age 60, or earlier with limitations
Funds must be used by the beneficiary, for any purpose
The 10-Year Rule: Early withdrawals may require repayment of some grants/bonds
Special rules apply for those with shortened life expectancy
Let’s Maximize Your RDSP
At AJ Wealth Management, we help families navigate the RDSP setup, grant eligibility, and contribution strategies so you can maximize every dollar. We’ll walk you through:
Opening an RDSP with a qualified institution
Applying for the Canada Disability Savings Grant
Coordinating family income filings for the best match rate
Staying on track to reach your lifetime contribution and grant limits
Let’s build your secure future—together.
📞 Book a free Financial Literacy session today to explore how the RDSP and Canada Disability Savings Grant can work for your family.
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