What is the penalty percentage for each year that Carol retires early before her normal retirement age?

The penalty percentage for each year that a person retires early before their normal retirement age is established by various pension plans and regulations, often reflecting the need to offset the reduced time in which the retirement fund can grow and the extended period over which benefits will be paid.

In this case, a penalty of 3.5% per year for early retirement is commonly indicated under many pension frameworks. This percentage is applied to the pension benefits for each year that the individual chooses to retire before reaching the standard retirement age, effectively reducing the benefits received in recognition of the longer payout period and the shorter accumulation phase.

This approach helps ensure that the overall pension plan remains financially viable while still providing retirees the flexibility to access funds earlier than anticipated. The penalty serves to balance the interests of the fund and the beneficiaries.