When my parents retired, they had no issues when it came to retirement income.

In addition to Social Security, they both had retirement plans that offered a guaranteed monthly income for life. They also had investments, but they were the icing; the cake was those monthly checks. They didn't need to dip into their savings, because their income was more than enough to live on. It even adjusted for inflation.

While these types of retirement plans still exist, they're getting more and more rare. Take me, for instance: Soon I'll be eligible for Social Security, but it won't be nearly enough to support my lifestyle. And unlike my parents, I won't be getting any additional monthly checks. So my savings aren't the icing; they're the cake. It's up to me to figure out how to convert my savings into monthly checks, and up to me to make sure it will be enough to last a lifetime.

According to some researchers, retirees who have a predictable retirement income are happier than those who don't. Makes sense: Worrying about running out of money doesn't sound like a barrel of monkeys.

Solution? For many approaching retirement without a guaranteed income, it's an annuity: an insurance contract that converts a lump sum of cash into a monthly income for life.

But while annuities seem like the ideal solution to the retirement income problem, it's not all wine and roses. While ideal for some, they're not a perfect solution for all.

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