How To Save $398,891 For The Disabled Person?
Today, I want to share an example of how one could grow their disability savings to $398,891. Before I start, I want you to think about what does having that amount of savings would mean to the disabled person?
Will that mean more suitable medical equipments? Better treatment? Greater affordability to hire someone to assist the daily activities? More choices during the course of the lifetime since there will be more financial resources?
Illustration To Grow $398,891 Savings Within The Registered Disability Savings Plan (RDSP)
This is an illustration I read from Mackenzie Investments, one of the few financial institutions that I work with who truly provides great resources into the RDSP planning.
Jack is diagnosed with prolonged disability and approved with the disability tax credit. His family income is less than $21,287/year, and has always remained low income which allows him to qualify for the full amount of Canada Disability Savings Bonds. At age 19, he opens an RDSP account and start contributing $1,500 a year until he is 49 years old. The money is being invested which generates return of 5.5% annually. So let’s see what would happen when Jack reaches the age of 50.
Throughout the years,
– Jack has contributed $46,500 ($1,500 X 31 years)
– Received $70,000 of Canada Disability Savings Grant
– Received $20,000 of Canada Disability Savings Bond
– Assume the annual return is 5.5% over 31 years, the savings would grow to $398,891
If Jack did nothing and just let his savings sitting in cash, he would just be left with $46,500. Whereas, with the RDSP, he would save $398,891 when he reaches age 50. With such a significant increase in the savings, it takes off a lot of financial worries for Jack and his family, and provides more choices in life for Jack.
[note] Click Here To Learn More About Disability Savings Plan [/note]
Disclaimer: The above figures are only for illustration purposes, it differs for each individual’s case, and investment return is not guaranteed. Market conditions, tax laws, and investment factors are subject to change. Individual should always consult with a financial professional before making any decision. Image Courtesy Praisaeng, xtremelife, photostock, ambro, WitthayaPhonsawat/ FreeDigitalPhotos.net