To determine if a variable annuity is right for you can be a perplexing question. We do not know anything about you or your needs. We will give you universal guidelines on variable annuity suitability.

You should not consider an annuity, especially a variable annuity, unless you are maxing out your existing retirement plan contributions, such as your 401 (k) plan, 403 (b) or IRA. Your primary retirement vehicles will be those qualified plans and you should take full advantage of them.

A variable annuity is a long term investment. If you think you will need to access your money in a couple of years or pre-59 ½, you should not consider an annuity. Short term investments should be made in conservative, low risk, and highly liquid investments like money market accounts. Although fully taxable, they will be more suited to your needs.

If you are in an extremely low tax bracket or pay no taxes at all, then an annuity is not ideal for you, usually. Because a variable annuity is tax deferred, meaning you pay no taxes until you withdraw money, the tax advantage is of no use to you if you pay little or no taxes. However, it may make sense if you have adequate assets and want a guarantee of no loss of principal, but you must be fully aware of the product, the guarantees and the conditions that apply to the annuity.

A variable annuity can fit the portion of your portfolio that you wish to guarantee. The guarantees offered are vast and all very different. Some guarantees will guarantee future income, while others can guarantee current income or your initial investment back. Choosing the right guarantee for your needs is what is important, and making sure there are no hidden caveats will ensure that it will follow through on your expectations.

We believe variable annuities are good for individuals who are between the ages of 45 to 70, appropriateness for ages above and below are on a case by case basis. This group will be called, as we all know, baby boomers. These are people who are going to retire in the future or who are retired now.

Given the fact that these new living benefits can generate life long income now, without annuitization, they are appropriate for retirees. Although some people disagree with this, we feel that given the fact that these variable annuities can provide you with predictable and sustained income from the first day you buy it to the day you die, they make sense. Not to say they are right for everyone, but it can help you meet your needs.

Should seniors buy annuities, specifically variable annuities? That is a question that we could kick around for years. We define a senior citizen as a person who is over the age of 70. If the person has enough resources to cover emergencies and has no plans for the money, we see no specific reason not to own an annuity for a portion of the assets. We do not believe you should put 100% of your money into a variable annuity, no matter the situation.

Given the fact that people are living longer, an annuity may make sense. Especially if we have living benefits attached to them that can generate more income for them. If the person was 80 years old and wants a variable annuity, we would have to say this is probably not a good idea.

If you are worried about investment risk, we believe a variable annuity maybe a good option for you. With guarantees that a mutual fund cannot offer, these investments can and will give you your money back over a period of time. Other investments cannot or will not do that. Contrary to popular belief, people are not buying variable annuities for death benefits. They are buying them for living benefits.

To sum it up, just like any investment, variable annuities are not right for everyone, but they have their place in a portfolio. The only true way to know if a variable annuity is right for you is to talk with an advisor that you trust. I would advise you to not do business with an advisor who’s first and only recommendation is a variable annuity. Find someone who will look at your full financial situation and a person who has a general interest in your needs, not their own. Good advice is not that hard to find and never be afraid to shop advisors.

To find out which variable annuities are the better ones, subscribe to The Annuity Report.

To see our opinions on variable annuities in IRA's look here.

Annuity IQ's Consumers Corner.