Erin enjoys a rich life with her family and friends. Few families are better prepared to plan for the future. Ric and Pat, Erin’s parents, are well known family leaders who are involved with PLAN, Family Support Institute and Vela Microboard Association. Pat, who leads PLAN’s will & estate planning workshops, is a provincial authority on trusts, disability benefits and future planning strategies. Ric and Pat are excited about the prospects of the Registered Disability Savings Plan and the potential that it holds for Erin’s future.
Erin has recently celebrated her 29th birthday. If Ric and Pat set up a Registered Disability Savings Plan and contribute $1,500 a year for the next 20 years, the proposed plan would provide Erin with additional income of 31,000 per year for 20 years from her 60th birthday until she is 80.
The following table elaborates:
|
Contributions |
Withdrawals |
|
|
Family ($1,500/year for 20 years) |
$30,000 |
|
|
Disability Savings Grant ($3,500/year for 20 years) |
$70,000 |
|
|
Disability Savings Bond ($1,000/year for 20 years) |
$20,000 |
|
|
Total Contributions |
$120,000 |
|
|
Total Interest (approximate) |
$550,000 |
|
|
Disbursements ($31,000/year for 20 years) |
$682,000 |
The example assumes the following:
▪ The RDSP realizes average returns of 5.6% per year
▪ Erin’s income is less than $20,833 per year
▪ Total government contributions are $90,000 split between the grant and the bond.
Alternatively, if Erin, Ric and Pat wanted to use the plan to save for the purchase of a home, the capital would grow to $385,000 by the time Erin is 60, if no withdrawals are made from the plan.