You could less tax pay if you take your pension in a year when you have no other earnings

for your circumstances – whether you want a fixed income or one that’s inflation-linked.

Consider your spouse or partner – you can buy a joint annuity where they continue to receive your pension should you die.

OPTION 3... DRAWDOWN WHAT: Take your tax-free lump sum and leave the rest in the pot, withdrawing it as and when you need it. THE FIGURES: Tax-free amount: £10,000 Balance: £30,000 Tax: Will depend on when you withdraw your cash and if you have any other income in that tax year.

PROS: Complete flexibility to take your money when you want with no limits. Your money is still invested so has the potential for a higher income in future. CONS: The costs can be high and you could run out of money before you die.

CHECK: You must get professional help. Make sure you know the effect costs will have on your pot.

What are the risks to your balance? Most advisers wouldn’t recommend drawdown for pensions under £50,000.

OPTION 4... COMBINATION WHAT: You could use part of your pot to buy a guaranteed income, take out a lump sum and leave the rest, withdrawing it as and when you want. THE FIGURES: Tax-free amount: £10,000 Balance: £30,000 Tax: Will depend on timing and other sources of income.

PROS: Your income will be based on your personal circumstances. It’s taxefficient as you are only taking income as you need it. CONS: It could be expensive if you use separate plans for both products from different providers. Your drawdown fund might run out too quickly.

CHECK: You must get professional help. Do you really have enough in your pot for this to work? Make sure you compare charges. What are the risks to the balance left in your pension pot?