Answer:
- <em><u>The reduction is 8.6%</u></em>
Explanation:
Call F the full monthly pension of a person retiring at 62.
If a person continues to work the pension grows at a rate of 6% per year, compounded monthly, so use the compounded growing formula:
Where r = 6 / 100 = 0.06, and t = number of years after retirement.
<u>For retirement at 65.5</u>:
- t = 65.5 - 62 = 3.5
<u>For retirement at 67</u>:
- t = 67 - 62 = 5
<u>Percent reduction of people who retire at 65.5 compared to what they would receive at 67</u>: