New reforms coming into effect in April will allow people to withdraw money from their pension savings when they turn 55.
Those who opt to unlock their pot can opt to invest the cash, spend it, or give it away as they see fit. You could, for example, use the money to clear debts, or pay for a special holiday or a new car.
While the move has been broadly welcomed, as it will give those approaching retirement more flexibility, there are fears the new pension freedoms will put some people under pressure to use money to help struggling family members.
This could include helping children get onto the property ladder, or helping elderly relatives to fund care.
Can you avoid care fees? Read more...
Do not cave in to pressure
If you do have family members making demands on your money, it is vital not to feel pressured.
The key is to think about both the short and long-term implications for your retirement pot.
Having saved conscientiously for decades, if you then unlock your retirement pot and use the money to help others out financially, there is a risk of you eating through your pension funds too quickly.
This could result in you running out of money in your later years and becoming 'pension poor' in retirement.
Think carefully before freeing up money
Irrespective of whether you plan on giving the money away or using it yourself, you need to think very carefully before deciding to withdraw a few thousand pounds a year, as you could end up with no savings at all a few years down the line.
For example, if you have a £30,000 pension pot and withdraw £3,000 a year from age 65, your savings would run out around 10 years later, when you are aged 75 (the exact date would depend on the rate you were getting on your remaining savings).
Crucially, any decision you make on taking pension benefits must be considered as part of your full financial situation, to ensure you manage your savings in the right way.
Find out how to access a lump sum without touching your pension.
Making the right decisions
With all this in mind, it is vital that people fully understand the implications and consequences of their financial decisions.
In a bid to help make people make the right choices, the Government is set to offer Pensions Wise, a new impartial information and guidance service.
However, in addition to this, there are also calls for the Government and regulators to provide people with the tools and knowledge to help them avoid running out of money too quickly.
Having access to both unbiased guidance and tools which help you make informed decisions will ensure that having worked and saved hard throughout your life, you can make the most of your pension pot, and enjoy a comfortable retirement.
If you are not sure how the pension reforms will affect you, read our guide.