More than three-quarters have withdrawn money from their pension before retirement age, taking £47,000 on average, new data from Scottish Widows shows. Dipping into your pension can help clear debts, support family and boost your spending power, but may also store up problems for later life. 

At 55, your pension may have to last for another 30 years or more, so plan those withdrawals carefully.

Saving a big enough pension to see you through is tough enough. Working out how to make it last is even tougher.

Stephen Lowe, director at retirement specialist Just Group, likens it to flying a plane when you don’t know the weather conditions or final destination. “You have no idea how long you will live, how stock markets will perform or how inflation will erode your spending power.”

It was easier in the days of final salary schemes and guaranteed annuities, when your pension income would last as long as you did.

Most pensions are now invested in the stock market, with all risk on your shoulders, Lowe said. “Money taken early will not be available later. Economic volatility can knock the most sensible plan off course.”

At least the state pension is guaranteed, and Lowe suggested using this along with any guaranteed annuity or defined benefit pension, to cover essential spending. “Keep the rest for treats, luxuries, holidays and gifts, or simply leave it to grow.”

While there are risks in withdrawing too much, there is a danger in spending too little. “Your pension was money you saved to be comfortable in retirement. Don't scrimp and hoard, unless you really have to.”

People tend to live longer than they expect, so assume you will live to 90 or 100, said Becky O’Connor, director of public affairs at PensionBee.

“A crude and cautious approach would be to divide your pot size, minus the 25 percent tax-free lump sum, by the number of years your retirement could be.”

So if your pension is worth £100,000, and you take £25,000 tax-free, that leaves £75,000. If you are 65 and reckon you’ll plod on to 85, you could safely draw £3,750 a year.

In practice, you could almost certainly take more, O'Connor added. “Pension left in drawdown should continue to grow, so you should do better than this conservative estimate.”

Some use the ‘four percent rule’, also known as the ‘safe withdrawal rate’. This financial planning rule of thumb suggests if you draw this percentage of your pension each year, your money will last for 30 years or more. 

I've written more about the concept here.

Remember that high fees can erode your pension, so check you are paying no more than one percent a year, O'Connor said.

Today, most people leave their pension invested and take lump sums or income via drawdown, although annuity sales have picked up as interest rates rise.

A combination of the two may work best, O’Connor said. Use drawdown in early retirement to help your pension grow, then buy an annuity when you are older when you will get more income as your life expectancy is lower.

Andrew Tully, technical services director at a Nucleus Financial, said if you want your drawdown savings to last your lifetime then check regularly, at least once a year.

Do not overdo it, though. Your pension value will rise and fall with the stock market, and obsessively checking its value could lead to unnecessary panic when shares are falling, or excitement when they rise.

If possible, resist making withdrawals after a crash, as this will crystallise your losses and lock you out of the recovery. “Take income from funds which are less volatile, or keep a small amount in cash and withdraw income from that.”

You do not need to take all of your tax-free cash in one go but can draw it gradually over a number of years, Tully said. “If your pot grows this will boost your tax-free sum."

It helps to have other sources of income such as a part-time job, savings, Isas, Premium Bonds or even a buy-to-let property. Many people prefer to use these first, as unused as they may be subject to inheritance tax if you die, whereas unused pension isn't.

Tully said make sure you will qualify for the maximum state pension, too, and either claim National Insurance credits if eligible or make voluntary contributions if heading for a shortfall.

Consider taking independent financial advice. Over 50s should book a free appointment with impartial government guidance service Pension Wise. Pension freedoms are hugely popular but need to be handled carefully.