CPP Disability Benefits: Here’s How Much You Could Get

Not everybody can get CPP disability benefits. If you want some passive income, consider investing in Royal Bank of Canada (TSX:RY) stock.

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Are you interested in obtaining Canada Pension Plan (CPP) disability benefits?

If so, you may want to pay attention to how much such benefits can pay you. If you’re disabled, you can get some disability benefits from the CPP program. However, the amount is meagre, and applying for such benefits while not actually being disabled can get you in trouble. If you make a fraudulent CPP disability benefits claim, you may have to pay back the benefits you earned. With that major caveat out of the way, here’s how much money you can earn in monthly CPP disability benefits.

Up to $1,538 per month

According to the Canadian Federal Government website, you can earn $1,538 per month in CPP disability benefits if you get the absolute maximum amount. More likely, you’ll get the average amount, which is $1,132 per month. If you’re really unlucky, you can get the paltry sum of $558 per month, which is the absolute minimum.

Broadly speaking, these benefits are not worth taking unless you are genuinely disabled. The maximum you can earn in a year and still get the benefit is $6,600. Once you earn more than that amount, you have to inform Service Canada so they can cancel your benefits. If you don’t do so, you may have to repay your benefits in the future.

The maximum amount of combined income you can earn between CPP disability benefits and income combined is $25,055 per year. That is, $1,538 times 12, plus $6,599. This is only $2,000 per month. In Ontario, that will barely cover your rent, let alone all of your expenses combined. CPP benefits can be a much-needed lifeline if you are truly disabled, but for most people, continuing to work is preferable to taking them. Making a spurious CPP disability benefits claim and getting caught can get you in significant trouble, and for a paltry reward at that.

How can you get the maximum CPP disability benefits

If you’re really determined to get CPP disability benefits, here’s how to do it:

  • Make sure you’re not going to earn more than $6,600 this year.
  • Get a doctor to sign paperwork confirming you have a disability.
  • Fill out an application on Service Canada’s website.

If you are truly disabled and meet the criteria above, you should be able to get some benefits.

Not disabled? Try investing instead

If you’re not disabled, it’s nearly impossible to break into your CPP piggy bank before retirement. If you’re past 60, one way to get some benefits coming in is to simply apply for CPP regular benefits. Apart from that, you’re going to have a hard time.

The best way for most people to establish passive income is to invest in dividend stocks like Royal Bank of Canada (TSX:RY). I don’t mean you should invest all of your money in RY stock; think of it as an example of the kinds of stocks you could hold in your diversified stock portfolio.

Royal Bank of Canada is a Canadian bank stock. It has a 4.57% dividend yield. This means you get $4,570 in annual passive income for every $100,000 you invest in it. The stock’s payout ratio is 47%. This means that the company pays 47% of its profit out as dividends. That tends to indicate a pretty sustainable dividend. The company has increased its dividend by 7.2% per year over the last five years. Definitely don’t go out and invest all of your money in this stock. But a portfolio of stocks like it could earn you a substantial amount of passive income.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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