With retirement savings taking a beating since October, the decline in the stock market has chased savers into more conservative investments. One of those is a fixed annuity. These products often guarantee a fixed monthly income stream for life based on the amount invested. Sales of fixed annuities are up 78 percent in the first three months of this year compared with the first three months of 2008, according to the Beacon Research Fixed Annuity Premium Study.

It used to be the variable annuity attracted most investors as it allowed the amount invested to grow with its investments, mostly the stock or bond market. But many holders of variable annuities saw their balances plunge as much as 50 percent or more during the past year - and that put a scare in many retirement savers. Variable annuity sales decreased 5.4 percent in the first three months of 2009 than the first three months of 2008, according to the study.

The fixed annuity is becoming the preferred method of making sure money lasts in retirement for retirees with a modest net worth. Perhaps the biggest concern for retirees is running out of money, and the fixed annuity can allow that option of having the monthly payment last until death. A retiree then can budget expenses for the long term according to stable monthly Social Security checks and annuity income.

As with any investment, there are also downsides that need to be considered before determining if a fixed annuity is the right investment:

- Buying one involves taking a lump sum and locking it up. It can be withdrawn, but there is often a penalty if withdrawn sooner than allowed, usually within the first seven to 10 years.

- The monthly payment may not keep up with inflation. Some do make inflation adjustments so be sure to check. Otherwise, $500 received this month won't buy what it will five years from now.

- While money won't be lost in the market, it also won't be made so assets lose the possibility of growth.

- The investment may not be passed to heirs. There are policies that if $100,000 is put in tomorrow and the investor dies the next month, the insurance company keeps the money.

These downsides are often overcome by investing only a portion of retirement savings in the annuity. That way, the other portion can be invested for growth, available in emergencies without facing a withdrawal penalty and prevented from eroding by inflation.

(Dan Serra is a financial planner with Strategic Financial Planning Inc. in Plano, Texas. E-mail him at serrafinance@yahoo.com.)

(c) 2009, McClatchy-Tribune Information Services.