Patent ID: 8428974

Claim:
A method for managing a consumption strategy for an investor's retirement account, the method comprising: allocating funds from an investor's retirement account between a drawdown account and an option annuity; investing funds in the drawdown account using funds from the retirement account based on the allocating, wherein the drawdown account comprises assets invested in one or more markets; purchasing an option annuity using funds from the retirement account based on the allocating, 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; managing the drawdown account and the option annuity for the investor using an account manager configured to store account information for the drawdown account and the option annuity in an account data storage system; determining, using an allocation engine in a process executed by a computer processor, 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; for each of plurality of payment cycles before the deferral period is reached, paying the determined consumption amount to the investor from the drawdown account; and after the deferral period is reached, exercising the option annuity so that the option annuity provides payments to the investor for the life of the investor.