Pension savers who opt for drawdown should consider setting up a Lasting Power of Attorney (LPA), according to insurance group Zurich.
Drawdown allows savers to take an income from their pension pot while leaving the rest invested, rather than buying an annuity.
Since the pension freedoms were introduced four years ago, it has become a popular option. Based on the latest data from the Financial Conduct Authority, Zurich estimates that as many as 615,000 people have switched their savings into drawdown.
However, the company has warned about a "financial planning blind spot" which could leave tens of thousands of people financially vulnerable in retirement.
It said that investors managing drawdown without the help of a financial adviser need to make decisions on where to invest and how much to withdraw, at a time when their physical or mental health might be deteriorating.
If there is no LPA in place, their families or friends would be unable to quickly step in to help them with financial arrangements, without facing a lengthy court process.
Zurich research shows that seven in ten people in retirement have not set up an LPA.
"Registering a Lasting Power of Attorney has become even more crucial since the pension reforms," said Alistair Wilson, head of retail platform strategy at Zurich. "Hundreds of thousands of people are now making complex decisions about their pension into old age, when the risk of developing illnesses, such as dementia, increases. Despite this, a vast number of retirees are unprepared for a time when managing their pension might become hard, or even impossible. This problem is creating a potential time bomb as the population in drawdown expands and ages.
"Getting financial advice can help you to make the most of your savings, and ensure you have the right plans in place for all stages of your retirement."
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