Annuities In Tennessee
Guaranteed Retirement Income

If you’ve spent decades saving money, the last thing you want is to outlive it. An annuity can turn a portion of your savings into guaranteed monthly income, for a set period or for the rest of your life. We help Tennessee retirees find the right annuity from the right carrier. We also handle Medicare and Social Security planning, so we can show you how all three fit together before you sign anything. Call us at 931-316-1182 or use the contact form below.

What Is an Annuity?

An annuity is a contract between you and an insurance company. You pay a lump sum or a series of payments. The insurer guarantees you a stream of income, either right away or starting at a future date you choose. It’s not a stock market investment. Principal protection is written into the contract.

A concrete example: a Tennessee retiree with $150,000 in savings could convert that into a guaranteed monthly payment for life. The exact amount depends on your age, the annuity type, and current carrier rates. We’ll run those numbers for you, no cost and no obligation.

Types of Annuities Available in Tennessee

There are five types of annuities that come up regularly for Tennessee retirees. Here’s what each one does and who it fits best.

Fixed Annuities

A fixed annuity pays a guaranteed interest rate on your principal for a set term. Your money grows at a predictable rate, and the insurance company bears all the risk. Multi-year guaranteed annuities (MYGAs) are a common version. You lock in a rate for two to ten years, similar to a CD but with tax-deferred growth. Best for clients who want certainty above everything else.

Fixed Indexed Annuities

A fixed indexed annuity earns interest based on the performance of a market index, usually the S&P 500. Your principal cannot decrease when the market drops. You get some of the upside without the downside. This is the most commonly recommended annuity product for retirement-age Tennesseans who want growth potential but can’t afford to lose principal. Tennessee has no state income tax on annuity distributions. That makes the tax-deferred growth inside an FIA go further than it would in most other states.

Immediate Annuities

You pay a single lump sum and income starts within 30 days. There’s no accumulation phase. Best for clients who are already retired and need income now, typically 65 and older. Simple, predictable, permanent.

Deferred Annuities

Income starts at a date you choose in the future. Your money grows tax-deferred in the meantime. Best for clients in their mid-fifties who want to let a sum accumulate before drawing it down at retirement.

Variable Annuities

Variable annuities are invested in sub-accounts that function like mutual funds. Payments rise and fall with market performance. We don’t sell variable annuities at Upper Cumberland Life & Health. If a variable product is what you need, we’ll direct you to a securities-licensed advisor. We tell you this upfront because we’d rather lose a sale than put a client in the wrong product.

Tennessee’s Tax Advantage for Annuity Owners

Tennessee eliminated the Hall Income Tax in 2021. Annuity distributions are not subject to state income tax in Tennessee. Every dollar you draw from a fixed or indexed annuity stays whole at the state level. That’s not the case in most of the country.

Federal income tax still applies to the earnings portion of your distributions. The principal you contributed with after-tax dollars comes back to you tax-free; only the growth is taxed federally. For specific tax guidance, talk to a CPA or tax advisor. We don’t give tax advice, but we can explain how the mechanics work so you go into that conversation prepared.

Tax-deferred growth plus no state income tax at distribution makes Tennessee one of the better states in the country to hold an annuity. That combination is worth understanding before you decide whether an annuity fits your retirement plan.

How Your Money Is Protected

Two layers of protection apply to fixed and fixed indexed annuities in Tennessee.

First: your principal is contractually guaranteed by the insurance company. Fixed and indexed annuities are not invested in the stock market. The insurer’s obligation to you is written into the contract and backed by their claims-paying ability, not by market performance.

Second: the Tennessee Life and Health Insurance Guaranty Association (TLHIGA) covers annuity owners up to $250,000 per insurer in the event of insurance company insolvency. This is the same safety net that protects life insurance policyholders in Tennessee. It’s not FDIC insurance, but it is meaningful protection backed by state law.

We only place business with carriers rated A or better by AM Best. That’s our standard, not just a talking point.

How Annuities Work With Your Social Security and Medicare

This is where most annuity conversations go wrong, and where we’re different from most agents.

Annuity distributions count as income for Social Security taxation purposes at the federal level. If your combined income exceeds certain thresholds, a portion of your Social Security becomes taxable. Combined income means Social Security benefits plus other income, including annuity distributions. That’s a planning consideration, not a reason to avoid annuities. But build it into your retirement income model before you commit.

Annuity income also counts as Modified Adjusted Gross Income (MAGI) for Medicare purposes. If your MAGI exceeds the IRMAA thresholds, your Medicare Part B and Part D premiums go up. For 2024, the base IRMAA threshold is $103,000 for individuals. A large annuity distribution in the wrong year can trigger a surcharge you weren’t expecting.

Scotty Lewis is a Registered Social Security Analyst with credentials from the National Social Security Association. We’re one of the very few insurance agencies in Tennessee that can map out how an annuity, your Social Security timing, and your Medicare premiums work together. We can do it all in one conversation. Call us before you commit. Getting the sequencing right can be worth thousands of dollars a year.

Who Should Consider an Annuity?

Annuities are the right tool for some situations and the wrong tool for others. Here’s an honest breakdown.

Good candidates:

• Tennessee retirees who want guaranteed income they can’t outlive, regardless of what the market does
• Clients who’ve maxed out IRA and 401(k) contributions and want another tax-deferred vehicle
• Clients concerned about outliving their savings if they live into their 80s or 90s
• Clients receiving Social Security who want a supplement to cover fixed monthly expenses

Consider alternatives if:

• You need full liquidity in the next few years: annuities have surrender charge periods, typically five to ten years, and withdrawing early costs you money
• Your time horizon to distribution is under five years
• Your estate plan requires heirs to have full immediate access to assets

If you’re not sure which category you’re in, that’s exactly the conversation we’re built to have. There’s no cost to ask.

Who We Work With Across Tennessee

We’re based in Cookeville and serve clients across the Upper Cumberland region, including Crossville, Sparta, and Livingston. Most of our annuity clients are 60 to 75, close to retirement or already there. They want a licensed local agent who carries multiple carriers and doesn’t push one product.

We serve all 95 Tennessee counties. Clients in Cookeville and the surrounding area meet with us in person. Clients across the state work with us by phone and video. Same carriers, same coverage, same conversation.

Frequently Asked Questions About Annuities in Tennessee