by Diana Clement
He says that too often the financial risks of retirement are ignored. In many countries, New Zealand included, retirees get a lump sum of money and no real advice over and above a few pamphlets about how to invest it.
Yet "60% of a life time's accumulation of wealthy comes after retirement, providing you keep money invested for the average life expectancy." Ezra says only 10% comes from contributions, 30% from investment growth before retirement and the remainder after retirement.
"A good investment strategy after retirement is absolutely vital. That is where half the money comes from."
Too often retirees focus on their cash flow needs, whereas invested poorly their lump sum may not last, which should be of concerns to governments. In Australia, said Ezra a large proportion of those people who receive their superannuation pots as a lump sum simply blow it.
What's more, whilst the average person who reached the age of 60 went on to live until approximately 80, they needed to plan to live to 100, which was difficult for individuals to do.
Ezra is in favour of the annuity model, which is common in the UK, not so common in the US and virtually unheard of here. Whilst given the choice, 90% of people would take a lump sum over an annuity, the annuity significantly reduces financial risk.
Defined benefit schemes and annuities died a death in New Zealand, which he believes is a pity.
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