Setting Retirees on the Right Path
Former Boeing executive Bud Hebeler quickly learned that most advice for retirees is bad. It didn't take him long to come up with something better

Each of us can conjure our own specific retirement fantasy (mine mixes mornings in the ocean with afternoons of flawless stock-picking). But when I recently drove past the guardhouse of suburban Seattle's Meridian Valley Country Club to visit Henry K. ''Bud'' Hebeler, I had to think he's already enjoying much of what we all dream about. Trips by seaplane to fish British Columbia for king salmon. Winters skiing in Park City, Utah, followed by visits to sunny Scottsdale, Ariz. Time to design his own home. Steady volunteer work with the city's needy. Ample means to help his mother-in-law with medical bills, or to tide over any of four daughters and 13 grandkids in a pinch.

Yes, from Bud Hebeler's den, looking out past the rhododendrons' cool fire to the 16th fairway, you'd think the byword is satisfaction. Yet sitting with him there, I found he's still agitated--outraged by what he learned on retiring as one of Boeing's very top officers: The advice given by most financial planners stinks. ''I had a reputation as a forward-looking guy,'' he told me. ''And I'm reading this stuff, and I couldn't believe what they were telling people.''

Stuff, he said, such as advising retirees to set a budget simply by estimating the interest income on their nest egg. Financial journalists weren't much better. Even advice in the texts used to train financial planners struck him as ''horrible, horrible, horrible! It was so primitive.'' Ever since, Hebeler, 66, has been crusading through articles, books, seminars, and home-brewed software to raise the level of our retirement planning.

Thanks to the Internet, this crusade is steadily becoming less lonely. His site,, is spreading his views far beyond Mt. Rainier. ''His work is excellent. It's accurate,'' said Patrick Shine, a Middletown (N.J.) planner. ''For clients who are very serious, I turn to his stuff.''

LOCAL HERO. Another fan, Dick Allen, is an engineering manager in Los Gatos, Calif. Nearing his own retirement, Allen gave up on packaged software planning tools such as Quicken and Microsoft Money. ''You don't know their assumptions,'' he said. ''You don't know if you could trust them or not.'' So Allen began laboring over his own elaborate spreadsheets. Then, on the Web, he discovered Hebeler's software. ''When I looked at his, I said to myself: 'That's a better way to do it.' I got a very high degree of confidence that I knew what was going on.''

The advisory tools Hebeler posts at his site aren't free (table, page 154), but by all accounts he's not in this for the money. A St. Louis native, Hebeler took engineering degrees from Massachusetts Institute of Technology before heading west in a 1956 Volkswagen for Seattle and Boeing. By the early 1980s, he was running its $3 billion aerospace unit, directing some 20,000 employees, and schmoozing clients on Boeing's yacht.

In 1989, a few years after losing his shot at becoming Boeing CEO, Hebeler retired. He had money enough. But still just 55, what he had more than enough of was time and energy. He started lavishing both on spreading what he had learned about retirement planning. His first foray, a book, flopped. ''Those publishers won't talk to you,'' he found. ''I'm a guy who has had a chauffeur, and a staff to do my research, and I couldn't get past the secretary.'' An agent didn't help either. So Hebeler turned to giving seminars locally. In 1994, he found a small publisher to issue the book, Retirement Resources: How Much Can I Spend?

Out of print now, it's much like the rest of Hebeler's output: meaty, financially conservative, a bit cranky, time-consuming--and altogether helpful. A second book, Managing Retirement Resources, he publishes himself in spiral-bound form. Like many books on the topic that you might find at Barnes & Noble, it covers the familiar basics, including taxes, inflation, investments, and that Excedrin marketing ploy, required minimum distributions. Its rarer value lies in how Hebeler has distilled comprehensive mathematical solutions to some tricky practical problems.

''ADAPTIVE FEEDBACK.'' These formulas always account for purchasing power lost not just to inflation but also to investment advisory fees and commissions. Hebeler also carefully considers how large, extraordinary cash inflows or expenses--proceeds from the sale of a vacation home, for instance, or the purchase of new cars--are likely to affect a retiree's future budget. More complicated still are the effects that the year-by-year pattern of inflation and investment returns can have on your quality of life in retirement.

How, for example, do you adjust a retirement budget to falling (or rising) inflation and a growing (or dwindling) brokerage balance? If you figure you can safely spend so much each year given average rates of inflation and returns on stocks and bonds, you can go awry fast if your early retirement years don't measure up. Hebeler's latest spreadsheet program, The Real World, shows how a 65-year-old retiring in 1970 and drawing $50,000 a year from a $1 million nest egg, 40% invested in stocks, 60% in cash and bonds, would have been out of money by age 79. All else the same, another person retiring just five years later and escaping years of high inflation and retreating stock markets would have still had nearly $545,000 on turning 79.

To deal with that uncertainty, Hebeler suggests using ''adaptive feedback,'' an idea familiar to makers of autopilot systems on airplanes. ''There's a lot of similarity between the economy going up and down and gusty air,'' Hebeler said. If an autopilot senses an upward burst of wind, it will use that information to adjust the jet's direction to keep it on course. Similarly, Hebeler's Strategic Retirement Planning II spreadsheet includes a routine that can adjust your annual expense budget to how inflation and the markets fared in the past year.

He also suggests adjusting your planning for any Big Picture observations about your life or the economy that you, as the ''pilot'' of your portfolio, care to make in setting your budget. ''Most financial planners say: 'Just raise your spending by 3.5% a year,''' Hebeler said. ''That's what we call 'open loop.' There's no feedback. Inflation could have been a lot more, or your returns a lot less. That could cause trouble, and you should take advantage of a little bit more knowledge.''

This way of thinking may strike many investors as too conservative, or as just plain odd. Others see his approach as a welcome antidote to glib retirement advice. ''Our industry tends to sell to the path of least resistance--which means that you don't want to scare anybody,'' observed Paul Merriman, whose Seattle-based Merriman Capital Management runs $300 million. Hebeler's spreadsheet, he said, has some gaps. For instance, Hebeler ignores investments in foreign stocks. But Merriman likes the program overall, noting: ''He wants people to be more realistic, to be more prepared for the sales pitches of financial planners.''

To that end, Hebeler is nowhere near done. He's working on his third book, which he aims to finish by yearend. He wants to simplify his ideas, turning them into something his wife, Mirriam, will be able to use long after he's gone. She's not sure why he spends so much time on all this. We can be glad he does.

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Setting Retirees on the Right Path

TABLE: Hebeler's Hints

TABLE: Hebeler's Helpers

Retirement Guide MONEY
-Susan Scherreik on homes for retirement
-Bill Glasgall on smart retirement planning

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