Hebeler Autopilot II

The Hebeler Autopilot strategy derives its name from its creator, a financial advisor named Henry K. Hebeler. This is the second algorithm that he created, hence the "II" in the name.

The way that Autopilot II works is as follows: you combine 75% of your previous year withdrawal with 25% of the withdrawal you would make using the PMT formula.

The Autopilot algorithm has qualities that place it in the middle of the "Maximize Spend" and "Maximize Longevity" withdrawal strategy groups. It can typically last for many years after your projected retirement date, and frequently has a nonzero portfolio in the final years, which is why it has been grouped in "Maximize Longevity."

Strengths

  • It responds to market conditions, increasing risk of success by reducing spending when the market is performing poorly and increasing spending when the market does well.
  • It responds smoothly to market conditions, so that year-after-year changes to your withdrawal are small, unlike the Percentage of Portfolio strategy.
  • Its algorithm is straightforward enough to calculate annual withdrawals using spreadsheet apps like Google Sheets or Microsoft Excel.
  • Tends to have larger withdrawals than other Maximize Longevity strategies.

Weaknesses

  • Like all withdrawal strategies that vary based on market conditions, annual withdrawals can become too low without a minimum withdrawal in place.