Nervous Retiree

If Deleted_User had an interest-only mortgage coming up to maturity that they wanted to pay off with the tax free cash, it might make sense.

But if you are not planning to spend all the tax free cash at a specific date in the next five years which cannot be deferred, it is much less likely to make sense.

£5k is a reasonable initial fee. You can get lower (especially if you required ongoing advice). The most important thing however is whether you are comfortable with the adviser and what they propose. You can always find someone who will do the job cheaper, you can't always find someone who will do it better.

Do you need a lifetime annuity when your wife has State Pension and occupational pension to come in later? Would that leave you with "too much" guaranteed income once those kick in (i.e. you spent too much of your pension funds on guaranteed income you won't need?)

What if we go through another period of the kind of inflation we saw in the 70s, after you'd spent all / most of your pension fund on an annuity increasing at 3%?

Is that a joint annuity or single you are looking at? If the latter, would you wife have sufficient income if you died?

The protection offered by annuities comes at a very high price. Going for a 3% annuity rather than one linked to RPI suggests you are trying to keep that cost down while still keeping some protection against rising costs, but trying to keep the cost of an annuity down is like haggling in Harrods.

None of these questions are to suggest you shouldn't buy an annuity, they are only points that should be considered. If you see an IFA they will also go through these questions to make sure it is the right decision.

How much is the buy-to-let worth? There could be Inheritance Tax implications to consider. Spending your IHT-exempt pension fund on annuity which dies with you, when you have substantial assets outside a pension which you could spend instead, is potentially Inheritance Tax inefficient under current rules.