Retirement planning system and method

• US 20070250427A1
• Filed: 06/08/2007
• Published: 10/25/2007
• Est. Priority Date: 01/05/2005
• Status: Abandoned Application

• Current Assignee: Northwestern Mutual Life Insurance Company Incorporated
• Original Assignee: Northwestern Mutual Life Insurance Company Incorporated
• Inventors: Robinson, Charles
• Application Number:
  US11/811,453
• Publication Number:
  US 20070250427A1
• Time in Patent Office: Days
• US Class Current: 705/36.R
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A computer-implemented retirement planning system comprises data collection logic, modeling logic, and report generation logic. The data collection logic is configured to receive data pertaining to an individual planning for retirement. The retirement modeling logic is configured to process the data to generate parameters of a retirement plan. The retirement plan comprises a retirement income arrangement in which the amount of inflation-adjusted retirement income (from sources other than long term care insurance and health insurance) is larger during early years of the retirement plan and decreases as the maximum life expectancy of the individual is reached. The report generation logic is configured to generate a retirement plan report describing the retirement income arrangement.

Claims

1. A computer-implemented retirement planning system configured to generate a retirement plan for a couple including a first retiree and a second retiree, the system comprising program logic stored in memory including:

data collection logic, the data collection logic being configured to receive data pertaining to the couple planning for retirement;

retirement modeling logic, the retirement modeling logic being configured to process the data to generate parameters of the retirement plan, the retirement plan comprising a retirement income arrangement in which the amount of inflation-adjusted retirement income from sources other than long term care insurance and health insurance is larger during early years of the retirement plan and decreases as the maximum life expectancy is reached, and the retirement modeling logic being configured to take into account (i) a first set of spending and/or income parameters based on a first period of time in which both the first retiree and the second retiree are assumed to be alive, and (ii) a second set of spending and/or income parameters based on a second period of time in which one of the first retiree and the second retiree is assumed to have passed away; and

report generation logic, the report generation logic being configured to generate a retirement plan report describing the retirement income arrangement.

2. The system of claim 1, wherein the second set of spending and/or income parameters reflect changes in income attributable to life insurance proceeds associated with the passing away of the retiree that is assumed to have passed away.

3. The system of claim 1,

wherein the modeling logic is configured to take into account the existence of a life insurance policy;

wherein, under the life insurance policy, one of the first and second retirees is the insured and the other of the first and second retirees is the beneficiary; and

wherein the second set of spending and/or income parameters reflect changes in income attributable to the availability of the cash value of the life insurance policy, the cash value becoming available to the insured upon the passing away of the beneficiary.

4. The system of claim 1, wherein the second set of spending and/or income parameters reflect a reduction in spending associated with the passing away of the retiree that is assumed to have passed away.

5. The system of claim 1, wherein the retirement plan is configured to vary the amount of inflation-adjusted retirement income provided to the first and second retirees for lifestyle spending and basic needs spending, and wherein the retirement plan is configured to vary the amount of inflation-adjusted retirement income in accordance with an estimated marginal utility of money for the first and second retirees during the retirement.

6. The system of claim 5, wherein the retirement plan report is configured to provide the first and second retirees with information describing how the amount of inflation-adjusted retirement income varies in accordance with the estimated marginal utility of money for the first and second retirees during the retirement.

7. The system of claim 1, wherein the retirement income steadily decreases towards a basic needs level as the maximum life expectancy of the first and second retirees is reached.

8. The system of claim 1, wherein the retirement plan report presents a comparison of the amount of inflation-adjusted retirement income received by the first and second retirees under the retirement plan with the amount of inflation-adjusted retirement income that would be received from the same starting retirement assets if the income were generated in an inflation-adjusted but otherwise time-invariant fashion.

9. The system of claim 1, wherein the amount of inflation-adjusted retirement income from sources other than long term care insurance and health insurance is at least two times as large during the early years of the retirement plan as compared to when the maximum life expectancy of the first and second retirees is reached.

10. The system of claim 1, wherein the amount of inflation-adjusted retirement income from sources other than long term care insurance and health insurance is at least three times as large during the early years of the retirement plan as compared to when the maximum life expectancy of the first and second retirees is reached.

11. The system of claim 1, wherein the data collection module is configured to present questions configured to elicit information concerning the tolerance for risk of the first and second retirees in connection with the prospect of receiving an amount of income which is less than a worst case scenario basic needs level as the maximum life expectancy of the first and second retirees is reached.

12. The system of claim 1, wherein the data collection module is configured to present questions configured to elicit information useable to ascertain what the first and second retirees consider to be a worst case scenario basic needs level of retirement income.

13. A computer-implemented system for monitoring and maintaining retirement plans of retirees, the system comprising program logic stored in memory including:

retirement plan maintenance logic, the retirement plan maintenance logic being configured to receive information concerning the retirement plans of the retirees and to receive information concerning actual financial performance of investments of the retirees, the retirement plan maintenance logic being configured to perform comparisons of the actual financial performance of the investments of the retirees with a predicted performance of the investments of the retirees as set forth in the respective retirement plans, and the retirement plan maintenance logic being configured to generate notifications indicating deviations between the predicted financial performance and the actual financial performance of the investments.

14. The system of claim 13, wherein the retirement plan maintenance logic is configured to receive updates concerning the financial performance of the investments from investment account systems associated with investment services entities that manage investments for the retirees.

15. The system of claim 13, wherein the retirement plan maintenance logic is configured to implement mid-course corrections in the retirement plan after detecting the deviations between the predicted financial performance and the actual financial performance of the investments.

16. The system of claim 15, wherein the retirement plan maintenance logic is configured to implement the mid-course corrections after a notification is communicated to the retiree advising the retiree that the mid-course correction is to be implemented.

17. The system of claim 16, wherein the mid-course correction is configured to be implemented pursuant to a negative consent provision of a retirement plan agreement with the retiree.

18. A retirement product embodied in a retirement plan agreement between a retiree and a service entity that maintains the retirement product, comprising:

a bundled set of investment products configured to generate retirement income throughout a plurality of phases of retirement including an active phase, a slowing down phase, and a passive phase;

a series of opt-in provisions and/or opt-out provisions, the series of provisions being configured to permit the entity to make investment decisions on behalf of the retiree pursuant to the retirement plan agreement.

19. The retirement product of claim 18, wherein the retirement product is configured to provide a retirement income arrangement in which the amount of inflation-adjusted retirement income from sources other than long term care insurance and health insurance is larger during early years of the retirement plan and decreases as the maximum life expectancy is reached.

20. The retirement product of claim 19, wherein the retirement product is configured to take into account (i) a first set of spending and/or income parameters based on a first period of time in which both the first retiree and the second retiree are assumed to be alive, and (ii) a second set of spending and/or income parameters based on a second period of time in which one of the first retiree and the second retiree is assumed to have passed away.

21. The retirement product of claim 20, wherein the retirement product is configured to vary the amount of inflation-adjusted retirement income provided to the first and second retirees for lifestyle spending and basic needs spending, and wherein the retirement product is configured to vary the amount of inflation-adjusted income in accordance with an estimated marginal utility of money for the first and second retirees during the retirement.

22. The retirement product of claim 20, wherein the retirement income for lifestyle spending and basic needs spending steadily decreases towards a basic needs level as the maximum life expectancy of the first and second retirees is reached.

23. The retirement product of claim 20, wherein the amount of inflation-adjusted retirement income from sources other than long term care insurance and health insurance is at least three times as large during the early years of the retirement plan as compared to when the maximum life expectancy of the first and second retirees is reached.

24. A computer-implemented retirement planning method for generating a retirement plan for a couple including first and second retirees, comprising:

receiving user inputs indicating a level of income the first and second retirees consider to be a worst case scenario basic needs level of income;

receiving user inputs indicating the first and second retirees'"'"' tolerance for risk in connection with the prospect that actual retirement income during a final phase of retirement may be less than the worst case scenario basic needs level of income;

receiving user inputs indicating the first and second retirees'"'"' predicted spending and/or income variations between a first period of time in which both the first retiree and the second retiree are assumed to be alive and a second period of time in which one of the first retiree and the second retiree is assumed to have passed away; and

generating a retirement plan based on (1) the basic needs level of income, (2) the first and second retirees'"'"' tolerance for risk in connection with the prospect that the actual retirement income during the final phase of retirement may be less than the worst case scenario basic needs level of income, and (3) the predicted spending and/or income variations between a first period of time in which both the first retiree and the second retiree are assumed to be alive and a second period of time in which one of the first retiree and the second retiree is assumed to have passed away.

25. The method of claim 24, wherein generating the retirement plan comprises generating parameters for the final phase of retirement, and then working backwards based on the parameters for the final phase of retirement to generate additional parameters for earlier phases of retirement.

26. The method of claim 24,

wherein the retirement plan is configured to vary the amount of inflation-adjusted retirement income provided to the individual in accordance with an estimated marginal utility of money for the individual during the retirement;

and

wherein the method further comprises generating a retirement plan report which describes the retirement plan, the retirement plan report being configured to provide the individual with information describing how the amount of inflation-adjusted retirement income varies in accordance with the estimated marginal utility of money for the individual during the retirement.

27. The method of claim 24,

wherein the retirement plan comprises a retirement income arrangement in which the amount of inflation-adjusted retirement income from sources other than long term care insurance and health insurance is at least twice as large during early years of the retirement plan as compared to the amount of inflation-adjusted income that is received as the maximum life expectancy of the individual is reached.

wherein the method further comprises generating a retirement plan report which describes the retirement plan, the retirement plan report being configured to provide the individual with information describing the decrease in the amount of inflation-adjusted retirement income throughout retirement;

and

wherein the retirement plan presents a comparison of the amount of inflation-adjusted retirement income received by the individual under the retirement plan with the amount of inflation-adjusted retirement income that would be received by the individual from the same starting retirement assets if the income were generated in an inflation-adjusted but otherwise time-invariant fashion.