Pension freedom kicks off in just a few days time, and you will be able to take as much money from your pension whenever you want once you reach age 55. No limits. If, like many, you wish to take income throughout your retirement and don’t wish to be ‘tied down’ by an annuity, then flexi-access drawdown seems a good alternative.

But whilst this choice may suit some people, it’s far from a simple option. On the contrary, there are bear pits you need to watch out for. There is no one size fits all solution. Instead, each person’s experience of drawdown will be different, because every person’s life, and need for income and cash in retirement, will be different.

Drawdown, unlike an annuity, is fluid, it is constantly evolving. It changes as a result of how much income you take, how your personal circumstances alter, and the investment returns you achieve. You have to constantly review your plans, and if necessary make changes to get back on track or exit drawdown completely. You cannot afford to turn drawdown on and then just leave it unchecked. What might have been suitable twelve months or five years ago, may no longer be suitable now.

Under flexi-access drawdown, you can take 25 per cent of your pot as a tax-free lump sum (albeit if you don’t actually need the tax-free cash, you could achieve greater tax-efficiency by taking instalments of tax-free cash as part of your ongoing income) and with the remainder of your pension fund you can draw down any amount of income at your marginal tax rate.

But just drawing money from your pension fund is full of risks, many of which you may not be aware of:

• Sustainability risk

This is, quite simply, the risk of your money expiring before you do. On average, we underestimate our life expectancy by 8 years. Finding the balance between living for today and having enough for all your tomorrows will be an ever changing equation and challenge using drawdown.

• Inflation risk

Inflation can do some serious damage to the value of an income – a key consideration when you think how much longer we are all living. For example, an inflation rate of 3 per cent a year would cut the value of your income in half in real terms in less than 25 years.

• Investment risk

You know that funds can rise and fall, but have you considered ‘sequencing risk’? This is the risk of needing to take money out of your fund when markets are down, thereby crystallising a loss. An adviser can help you to manage your fund with a mixture of short term funds and cash to mitigate this risk.

Drawdown isn’t just about investment but clearly it plays a hugely important role. This can seem daunting – poor investment can hit your future income hard. But taking fright and leaving your drawdown fund in ‘safer’ investments such as cash will only backfire on you. A degree of investment risk is necessary to be able to get the income you need and want in retirement. Every year we show our drawdown clients how a 30 per cent fall in the stockmarket would affect them. This ‘shock tactic’ tests whether they genuinely have the appetite for investment risk that effective drawdown entails.

Longevity risk: Finally, for most people, drawdown is not a solution to last you the rest of your life. At some point it will be necessary and beneficial to buy annuities with your pension fund just to make sure your lifespan doesn’t outstrip your fund. So you need to draw up an exit plan based on when is the best time to buy an annuity for you. This depends on a host of personal circumstances, including your health.

However, there isn’t usually one right day to buy an annuity and a gradual move by buying a series of annuities could be more effective to preserve flexibility while securing income. Just as investing all of your fund in equities on one day involves huge market timing risk, so putting all of your fund into an annuity involves the risk that gilt or bond yields are low making the annuity expensive.

The idea of people embarking on the drawdown route on their own scares me. This is complicated stuff. Mistakes are easy to make, often irreversible and can be extremely expensive. Getting help from a regulated adviser seems the sensible route to help set up the initial investment, review your plans and devise a suitable exit strategy.