Patent ID: 7243081

Claim:
A computer program product storing computer instructions therein for instructing a computer to determine a substantially optimal asset allocation utilizing cash flow simulation, the computer program product comprising: a recording medium readable by the computer; and, computer instructions stored on said recording medium, wherein the computer instructions instruct the computer to: (a) permit a user to select at least one of a risk avoidance weight or a rate of return for a given retirement plan; (b) facilitate the selection, by at least one of the user and the computer, of a plurality of asset allocations, wherein the plurality of asset allocations includes at least one of a fixed income or an equity asset; (c) determine a performance index for each asset allocation in the selected plurality of asset allocations, wherein the performance index determination is made by: i) generating one or more risk tolerance baselines based on one or more user defined risk tolerance factors; ii) simulating benefit and asset cash flows as future financial projections based on plan benefit cashflows and each asset allocation in the selected plurality of asset allocations; iii) determining if at least one risk tolerance failure occurs by comparing the future financial projections with the one or more risk tolerances; and, iv) assigning a performance index to each of the selected plurality of asset allocations based on at least said determining step (iii); and, (d) indicate to the user that the asset allocation with the best performance index from among the plurality of selected asset allocations is the substantially optimal asset allocation.