The Markowitz mean-variance model is widely accepted as the gold standard for asset allocation on the way to retirement. Unfortunately, this framework only considers the risk and return tradeoff in the financial market. It does not consider the longevity risk people face during retirement. And, while a variety of recent papers in the Journal of Financial Planning have discussed the mechanics and importance of payout (also known as lifetime) annuities, the industry literature currently lacks a coherent and formal model of how much wealth should be allocated in-and-between asset classes within a payout annuity. To fill this gap, our paper revisits the importance of longevity insurance while discussing the problems with fixed payout annuities -- and then moves on to address the proper asset allocation between conventional financial assets and variable payout annuity products. As in the classical Markowitz framework, our focus is on maximizing a suitably defined objective function in an intuitive, comprehensible, and practical manner. In addition to the usual risk and return information from the financial markets, our modelling framework requires inputs on the relative strength of retirees bequest motives, subjective health status, and liquidity restrictions. To illustrate the model, we provide some specific case studies and numerical examples to show how a financial planner can actually apply asset allocation ideas within-and-between payout annuity products and conventional asset classes.