Retirement consumption strategy with drawdown account and option annuity

A computer program product for allocating funds for the purpose of managing a consumption strategy for an investor's retirement account, the computer program product comprising a computer-readable storage medium containing computer program code for:

• receiving an indication of an amount of funds invested from an investor's retirement account into a drawdown account, wherein the drawdown account comprises assets invested in one or more markets;
• receiving an indication of an amount of funds from an investor's retirement account used to purchase an option annuity, wherein the option annuity accumulates value until the option annuity is exercised, at which time the option annuity provides payments to the investor for the remaining life of the investor;
• storing account information for the drawdown account and the option annuity in an account data storage system;
• determining a consumption amount and a deferral period based on an expected performance of the drawdown account, wherein the consumption amount and the deferral period are determined such that:
• a payment of the consumption amount from the drawdown account for each of a series of payment cycles will deplete the drawdown account when the deferral period is reached, and when the deferral period is reached, the option annuity will have accumulated sufficient value to provide a payment per payment cycle for the life of the investor that is equal to the consumption amount;
• recording the consumption amount and the deferral period determined for the investor in the account data storage system;
• outputting the consumption amount to indicate how much to pay the investor from the drawdown account for each of plurality of payment cycles before the deferral period is reached;
• and outputting the deferral period to indicate when the option annuity is to be exercised so that the option annuity provides payments to the investor for the life of the investor.

A retirement fund management system for managing a consumption strategy for an investor's retirement account, the system comprising:

• a processor;
• a memory for storing a plurality of software modules thereon;
• an account manager module stored on the memory, the account manager module configured to maintain account information for a drawdown account and an option annuity in an account data storage system, wherein the drawdown account comprises assets invested in one or more markets, and wherein the option annuity accumulates value until the option annuity is exercised, at which time the option annuity provides payments to the investor for the remaining life of the investor;
• an allocation engine configured to determine a consumption amount and a deferral period based on an expected performance of the drawdown account, wherein the consumption amount and the deferral period are determined such that:
• a payment of the consumption amount from the drawdown account for each of a series of payment cycles will deplete the drawdown account when the deferral period is reached, and when the deferral period is reached, the option annuity will have accumulated sufficient value to provide a payment per payment cycle for the life of the investor that is equal to the consumption amount;
• a payment engine configured to cause a payment to the investor from the drawdown account of the consumption amount for each of plurality of payment cycles before the deferral period is reached;
• and an annuity provider interface configured to indicate an expiration of the deferral period for exercising the option annuity and initiate payments to the investor for the life of the investor.