Retirees could be at risk of emptying their pension nearly a decade early by taking cash lump sums, research from Legal & General (L&G) has found, with 46 per cent suggesting that they would take a lump sum out of their pension "simply because they could".

L&G's research showed that 15 per cent savers felt like the cash lump sum from their pension was an unexpected financial bonus, rather than part of their long-term savings plan, while a further 10 per cent said it felt like a payday that they wanted to spend.

In addition to this, over a fifth (22 per cent) said they took out a cash lump sum or would consider doing so because they wanted to put it into a current account or cash ISA to keep for a rainy day.

However, L&G warned that this could leave some people exposed to unexpected tax bills or losing entitlement to means-tested benefits, such as universal and pensions credit.

L&G also stressed that savers are drawing down at unsustainable rates, noting that, with the average life expectancy of a current 60 year old in the UK sitting at 86, some retirees could be left with a nine-year shortfall in their retirement savings.

Indeed, according to L&G's research, on average, people have £87,500 in their retirement pot before they start accessing it. Just under a third (32 per cent) will take a cash lump sum once they are eligible to do so, on average at age 60.

Those that access cash from their pension typically take out 25 per cent of their pot – the maximum allowance that people can access tax-free – and typically take an average income of £875 per month once they reach state pension age.

The research also found that 14 per cent of those who have accessed cash from their pension revealed they have regrets about doing so or spent more than they planned.

Among these respondents, 29 per cent had unexpected costs to cover, and 26 per cent felt they could afford it at the time.

A further one in seven (15 per cent) said that since taking a lump sum, they have become more concerned about outliving their remaining pension savings.

Among those with spending regrets, 11 per cent admitted they didn’t fully understand the impact of their decisions.

This is perhaps unsurprising, as majority (58 per cent) of those surveyed accessed their pension without seeking any formal advice or guidance from their pension provider, an adviser or from support services like MoneyHelper.

Commenting on the findings, research partner and clinical psychologist, Dr Emma Hepburn, said: “Our biases can influence what we do with our money, potentially resulting in inadequate planning for the future or making us more likely to spend too much in the here and now.

"As this research shows, if we view our money as a reward or bonus, we may be more likely to spend it, which can lead to what has been dubbed “the lottery effect”.

“Perceptions of risk also often come into decision making, and we tend to favour decisions that feel more certain.

"As a result, we can feel that having or using money in the here and now is less risky than waiting to access it, even though this may actually create more risk for our future selves.”

However, L&G suggested that tools such as its Guided Retirement Planner could help savers make better decisions, revealing that the planner has seen "positive early momentum" since its launch at the end of 2024.

According to L&G, the planner has so far been accessed by over 20,000 members, with 35 per cent of users looking to retire now or within 12 months, while 32 per cent are looking to retire within 5 years.

L&G head of DC clients, Jayesh Patel, said: “Far too many people are reaching the age at which they can access their retirement savings without having the support and tools they need to help make informed, long-term decisions.

“Our Guided Retirement Planner provides tailored feedback on the options available for members to achieve their retirement goals.

"By using the power of technology, our aim is to get members thinking about their finances holistically and building a long-term plan that works for them.”

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