Q: My husband just turned 63 and I turned 60 several months ago. We have been saving for retirement for many years. … We started seeing a financial planning team about 15 months ago and have them managing our IRAs. … I have come across to the planners as being a little risk adverse. … As a result of that, the planners recommended a variable annuity that would guarantee us a certain amount of income. Neither of us really understood the product, so I asked for some literature and that didn't seem very clear, either.

Vicki

A: According to the LIMRA Secure Retirement Institute, seven in 10 retirees and pre-retirees say having enough money to last their lifetime is a top priority. An annuity is a financial option that addresses that risk. In general I'm not a fan of variable annuities. The product is too often a high-fee, complex annuity difficult to analyze and understand, especially when considering all the available bells and whistles.

The way to look at variable annuities is as a niche investment. The complexity I worry about also allows for tailoring the product to match a particular financial need.

A variable annuity allows for tax-deferred savings in any number of mutual fund like accounts. You can choose how long you will receive a stream of payments at withdrawal. You also get to pick from a variety of death benefit options to protect the value of your investment for heirs. You can attach "riders" to the policy. Each comes with a cost.

You'll want to figure out the total fees and costs, including mortality and expense risk charges, administrative fees, underlying fund expenses and other fees. These can add up to as much as 4 percent a year. Variable annuities usually come with surrender charges, a penalty for early withdrawal. The charge typically begins at around 7 percent and declines to zero over the following five to seven years. I don't like surrender charges. The penalty limits financial flexibility.

Don't purchase any investment until you really understand the trade-offs. You'll want to explore alternative strategies. I would ask for a clear explanation of costs, benefits and trade-offs from your planner. I would comparison shop by looking at lower-cost products offered by firms like Vanguard, Schwab and TIAA-CREF. The SEC has a variable annuity primer on its website. Morningstar, the investment analysis firm, offers smart advice. Take your time.

Chris Farrell is senior economics contributor for "Marketplace" and commentator at Minnesota Public Radio.