Q. I’m about to retire and want to put most of my retirement savings into one pot from which I can draw income to subsidize my Social Security check. A friend has suggested that I buy an annuity. I’ve tried to read about this a little and just grow more confused. What are they, anyway?

A. I’m doing similar research facing my own retirement, and like you, find annuities confusing. As a journalist, I’m trained to simplify subjects — but sometimes that really means oversimplify. Your life savings is something that must not be oversimplified.

Let me share just a bit of what I’ve learned about annuities and then suggest you talk to your accountant, to a financial advisor, to a banker or a lawyer who can help you make the best decision for your particular situation.

First, an annuity is a financial contract between you and an insurance company. Although an annuity’s purpose is to provide retirement income, it’s certainly not a one-size-fits-all kind of product. There are three sets of terms you should become familiar with before you begin to shop:

• Single vs. flexible-payment: You can make a one-time, lump-sum payment or you can contribute money at various intervals.
• Fixed vs. variable: Fixed annuities earn a guaranteed rate of interest for a specific time period (backed by the health of the insurance company, not the Federal Deposit Insurance Corporation). Variable annuities go up and down with the products in which they are invested.
• Deferred vs. immediate: Immediate annuities are usually purchased with a single payment. It is a simple way to get a dependable stream of income payments guaranteed to continue for the rest of your life or for a period you select. However, your principal is not readily accessible. So if you put all of your money in this contract and then need more than the regular payment, you may lose some of your principal. A deferred annuity is not money for current expenses. It is a savings tool with a lot of options for how and when it will be dispersed.

Remember with annuities, as with all investments and income, there are tax consequences to your decisions. Also, be sure to do a little comparison shopping. Don’t buy an annuity from the first salesperson who makes a pitch for your business. If the deal looks too good to be true, be wary. Be sure you know the financial consequences of changing your mind later and doing something different with your money. Check the insurance company’s rating. Even if you buy the annuity from a bank, broker or agent, it is still a contract with a specific insurance company.

Probably purchasing an annuity will be only one part of your estate planning. It is worth investing a little money in financial advice you can trust. It might be good to look for a certified financial planner, a chartered financial consultant, or a certified public accountant who has also been certified as a personal finance specialist. At least those designations assure you the person has taken extensive training and passed qualifying exams.

It’s your money. Be careful about making quick decisions.