Insurance
•01 min read
Welcome to our brand-new series, A-Zs of Insurance. In this series, we will venture into the world of insurance to breakdown insurance jargon for you, so you’re empowered to make informed decisions about your financial security.
A crucial aspect of financial planning is thinking about retirement and the money you’ll need to enjoy those golden years comfortably. Retirement plans are generally a sought-after option for accruing a lump sum or creating a steady source of income during this phase.
When investing in a retirement plan, you’ll come across something known as ‘vesting age’. Let’s have a look at what this means.
For example:
Heena, a 45-year-old woman, wishes to invest in pension plan to have a happy and comfortable retirement. She plans on retiring at the age of 60 and chooses the same as her vesting age. So, she’ll have to invest in the plan and let the funds accrue for the next 15 years, after which her retirement income will begin.
When choosing your vesting age, consider factors like your retirement goals and the level of financial safety you’ll need then.
Vesting age means the age at which you’ll start receiving your pension. In other words, once you reach the vesting age, your retirement plan will start paying you the benefits.
The concept of vesting age is typically seen with life insurance plans offering a pension/annuity.
Insurers typically let you choose the vesting age, thereby giving you the flexibility to decide when you want your retirement income to start. Picking the right vesting age lets you plan for your retirement effectively, ensuring that you have a source of income when you need it.
