When they finish working, retirees have the option of taking up to a quarter of their pension savings as a tax-free lump sum.

Almost one in four people (24 per cent) of those who are set to retire in the next few years said that some kind of luxury getaway would be how they would be most likely to use it, compared with just 17 per cent who would bank the cash.

“The reality is that the golden days of retirement are far from a realistic prospect for the majority, and retirement really won’t be a holiday unless people take action now,” warned Scott Dolfi, GE Life chief executive.

“Obviously people will want to celebrate the start of their retirement but it’s important to think about the long-term,” he continued.

“With people living longer, people need to think even more about how they will cope financially with retirement. Spending on holidays may not be advisable if you will struggle on a day to day basis, which statistics indicate could be the case.”

Over half (51 per cent) of retirees surveyed by GE Life said they wished they had bolstered their pension savings by starting them earlier.

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© Adfero Ltd