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The retirement planning landscape has never been more complex. With traditional pensions almost entirely extinct and , millions of Americans are scrambling to find reliable income sources for their golden years. And, as investors and the allure of "guaranteed" returns grows stronger. So, it's no wonder that annuities, with their promise of guaranteed payments, have surged in popularity recently.

Case in point? Walk into any financial advisor's office and you're likely to as a cornerstone of retirement security, as these products are marketed as bulletproof retirement income solutions to avoid outliving your money. All you have to do is pay a lump sum for the annuity and receive monthly payments in return, which typically last for the rest of your life. And, aside from that steady income, the other benefits, like , are pretty compelling, too. 

But while an annuity may sound like a foolproof way to prepare for retirement, it's still important to question the safety of any financial or retirement product you sink money into. So, is it possible to lose money in an annuity? And if so, how do you protect yourself? 

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In short, yes — you can lose money in an annuity under certain circumstances. While annuities are marketed as safe and reliable, and while they generally are, and how you use it will determine how much risk you're taking on.

Here are a few ways your annuity investment could shrink:

The good news is that there are ways to limit these risks. Fixed indexed annuities, for instance, offer some market upside potential with built-in protection against losses. Riders, like inflation adjustments or death benefits, can also provide an extra layer of security but often at an added cost.

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Deciding whether an annuity fits your financial plan starts with understanding your goals. If you're looking for guaranteed lifetime income and are willing to trade some liquidity for security, . But if growth and flexibility are higher priorities, other options, like investment portfolios or bonds, might serve you better.

To help determine whether an annuity makes sense for you, it may help to consider these factors before buying:

Annuities can provide peace of mind and a reliable income stream in retirement, but they aren't risk-free. Between surrender charges, market fluctuations and inflation, there are scenarios where you could lose money or see your purchasing power erode over time.

If you want to avoid that risk, the key is to go in with your eyes wide open. Understand the fine print, weigh the pros and cons carefully and consider how an annuity fits within your overall financial picture. When done right, an annuity can be a valuable tool to help you enjoy a worry-free retirement, but only if you choose wisely.