Otar's "Gray Zone"

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Leesbro63
Posts: 6293
Joined: Mon Nov 08, 2010 4:36 pm

Otar's "Gray Zone"

Post by Leesbro63 » Tue Aug 12, 2014 11:06 am

Another post referenced Jim Otar's "Gray Zone. Perhaps someone could enlighten me on this or point me to some links. Sounds interesting.

User avatar
ObliviousInvestor
Posts: 3634
Joined: Tue Mar 17, 2009 9:32 am
Contact:

Re: Otar's "Gray Zone"

Post by ObliviousInvestor » Tue Aug 12, 2014 11:17 am

In his book Unveiling the Retirement Myth, Otar talks about the Green, Gray, and Red zones.
Jim Otar [page 440] wrote:1. If your withdrawal rate (WR) is lower than the sustainable withdrawal rate (SWR), then you are in the green zone. You have abundant savings.
2. If your withdrawal rate is greater than the annuity rate (AR), then you are in the red zone. You have insufficient savings.
3. If your withdrawal rate is between SWR and AR, then you are in the gray zone. You have sufficient savings.
The book is available for sale at his website via the "books" link on the left.

http://www.retirementoptimizer.com/
Last edited by ObliviousInvestor on Tue Aug 12, 2014 11:18 am, edited 2 times in total.
Mike Piper, author/blogger

User avatar
Toons
Posts: 13494
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Otar's "Gray Zone"

Post by Toons » Tue Aug 12, 2014 11:17 am

"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

The Wizard
Posts: 13356
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Otar's "Gray Zone"

Post by The Wizard » Tue Aug 12, 2014 11:30 am

Those zones have to do at least partially with the decision to annuitize a portion of one's accumulation to get a higher safe payout in retirement than one could do using a Safe Withdrawal formula.
Some folks look at this a a Pass/Fail decision and take personal comfort in the fact that they have sufficient savings to live on a 3% SWR and therefore do not NEED to annuitize.
Others look at annuitizing as an option to get 50% more retirement income and possibly have more income and options in retirement than during their working career.
So there's a lot of personal choice in the Gray and especially the Green zones...
Attempted new signature...

Post Reply