How do you know whether you should buy an annuity for income in retirement? Are there any rules that can help you decide if you need one? --Paul

I don't know of any rules of thumb that can tell you whether it's a good idea to devote some of your retirement savings to an annuity. That's probably because it's not just a financial decision.

There's a certain amount of subjectivity involved that mainly centers around whether additional guaranteed lifetime income might make you feel more secure about retirement and better able to enjoy your post-career life. So two people with similar finances might feel very differently about whether they ought to buy an annuity.

But while there are no specific rules, you can get a decent sense of whether you're a candidate for an income annuity (aka, an immediate annuity) by answering these three questions:

1. Do you need more guaranteed lifetime income than Social Security (and pensions, if any) will provide?

Some people forget that they'll already have an income annuity once they retire, not to mention one with payments that rise with inflation -- namely, Social Security. And if you qualify for a pension from an employer that you plan to take as a traditional check-a-month pension as opposed to a lump sum, you'll also have a second annuity.

So you don't want to just run out and buy an annuity and maybe end up with more guaranteed income than you actually need, as doing so might hamper your flexibility should your financial situation change during retirement.

To avoid that possibility, start by getting a handle on the retirement expenses you'll face. You can do that by going to an online tool like BlackRock's Retirement Expense Worksheet, which allows you to break down your expected retirement expenditures into upwards of 50 different items.

Next, if you're not already collecting benefits, go to Social Security's Retirement Estimator tool to find out what size payment you'll qualify for once you do. You can then compare the amount you'll receive from Social Security and any pensions to the income you'll need to cover your expenses.

Related: Are you really ready to retire?

If income from Social Security and pensions can cover all or nearly all of your essential living expenses, then you may not need any more guaranteed income. You may be better off simply investing your retirement savings in a mix of stock and bond funds that makes sense given your risk tolerance and then withdrawing funds as needed to pay for any basic expenses not covered by Social Security as well as any discretionary items and unanticipated costs that might pop up. (You'll also want to maintain a cash reserve equal to about a year's worth of any expenses not covered by Social Security and pensions.)

If, on the other hand, your Social Security and any pension payments fall well short of covering your essential expenses, then you might want to consider closing or narrowing that gap by devoting some, but not all, of your nest egg to an immediate annuity that can generate additional lifetime income.

Today, for example, a 65-year-old man who invests $100,000 in an immediate annuity would receive about $545 a month for life, while a 65-year-old woman would collect about $525 a month. A 65-year-old couple (man and woman) who invests $100,000 in an immediate annuity and takes the "joint life" option (or "joint and survivor" as it's also known) would qualify for a payment of about $470 as long as either one is alive. To see what size payment you might receive based on different ages and amounts invested, you can check out this annuity payment calculator.

2. Is your nest egg big enough that there's little chance you'll deplete it prematurely?

When you buy an annuity, you're essentially buying insurance to protect against the risk of outliving your savings. But if your nest egg is very large relative to the expenses you'll be depending on it to pay, then you may not need this insurance. I'm sure that Mark Zuckerberg will have more than enough money to cover his retirement expenses, Social Security or no. He'll manage quite well without an annuity.

But even if your net worth isn't anywhere close to that of Mr. Z -- which is true for nearly all of us -- you may still have enough in savings that your chances of running through your nest egg in your lifetime are low enough that you may decide to forego an annuity.

Let's say, for example, that after Social Security and any pension payments, you still need another $1,000 a month, or $12,000 a year, to cover your essential expenses. And let's further assume that you've been a diligent saver throughout your career and have a nest egg of some $600,000 invested in a 50-50 mix of stock and bond funds.

Related: 4 questions to ask before you retire

There are no guarantees. But if you start with an initial withdrawal of $12,000, or 2% of your $600,000 nest egg, and increase that amount for inflation each year to maintain purchasing power, the chances are very high that your savings would be able to support that level of withdrawals for at least 30 years. A 2% inflation-adjusted withdrawal rate fits well within the range of sustainable withdrawal rates outlined in American College professor Wade Pfau's Retirement Researcher Dashboard. So in such a scenario, you might reasonably conclude an annuity isn't necessary.

To gauge how likely it is that your nest egg will be able to support you throughout a long retirement based on the amount you intend to withdraw and how your money is invested, you can go to a tool like this retirement income calculator. Indeed, you may want to run a few different scenarios with different withdrawal amounts just to see how much wiggle room you have.

As you go through this exercise, you should also consider what other resources you may have to fall back on, such as cash value in life insurance policies or home equity that you could convert to income via downsizing or a reverse mortgage. But the point is that if the amount you'll need to withdraw from savings is small relative to the size of your nest egg, an annuity may very well be superfluous.

3. Would buying an annuity help you enjoy retirement more?

Even if the financial case for owning an annuity isn't particularly compelling, there may be another reason for devoting a bit of your savings to one: the guaranteed income an annuity generates may make for a more enjoyable and rewarding retirement. And in fact, there's a considerable amount of research that suggests that's the case.

For example, a 2015 TIAA-CREF Institute survey found that retirees who converted at least some of their savings into an annuity were roughly 60% more likely than those who hadn't to say their standard of living increased and that their retirement lifestyle exceeded their expectations. Previous studies from Towers Watson and the RAND Corporation showed that retirees who received guaranteed income from pensions or annuities tended to experience higher levels of satisfaction in retirement. Which makes perfect sense, since you're likely to feel more secure knowing you can count on a certain amount of income to continue flowing in the rest of your life regardless of whether the financial markets go haywire.

Even if you decide after answering these three questions that you are a candidate for an annuity, you'll want to take some time to learn more about how annuities work before committing to one. You'll also want to get quotes from several insurers; diversify by spreading your money among annuities of two or more insurers; and, to avoid investing all your money when rates are at a low, buy in phases rather than all at once.

Bottom line: The decision to buy or not to buy an annuity has too many dimensions to be reduced to rules of thumb. But if you take the time to seriously consider the questions above, and do a little legwork to acquaint yourself more with the pros and cons of annuities, you should be able to arrive at an answer that makes sense for you.