Some 44% of people are underestimating their life expectancy and withdrawing more than 10% of their pension savings each year running the very real risk that they will run out of funds later in retirement.

The report from AJ Bell is based on research amongst surveyed 250 adults aged 55 plus who had flexibly accessed their pension pots since April 2015. Their average level of total savings was £118,000.

While 57% of those aged 55 to 59 were withdrawing more than 10% of their fund each year, this came down to 43% in the 60 to 64 age bracket and 34% for those aged 65 to 69.

At this rate, says AJ Bell, many savers could run out of their pension funds in just 12 years.

Tom Selby, senior analyst at AJ Bell, said: The evidence suggests many people might be severely underestimating how long their pension income will need to last for and as a result the levels of withdrawals they are choosing to make look questionably high in many cases.

People using the pension freedoms are playing a life expectancy guessing game and are often coming up short.

AJ Bell’s report found that about 47% were taking ad hoc lump sums, compared with 35% taking regular withdrawals, and so using income from other sources to fund day-to-day spending.

Mr Selby added that: There is a clear need to understand the behaviour of people using the pension freedoms and ensure they have all the information, guidance and advice they need to make informed decisions.

How to ensure you don’t overstretch your savings

If you want to know exactly how much you can afford to take out from your pension pots and still have enough for a secure retirement, key your data into the RetireEasy LifePlan and you’ll see the figures in easy to follow charts. You can even try out different scenarios to show what happens when you allow for different life expectancies.