- Taking money from your pension before you retire has tax consequences
- Doing this also reduces the size of pot you will have when you do retire
- It is better to withdraw from other assets such as cash savings if possible
Rising bills and increasing costs may mean you are looking for additional sources of money and if you are over age 55, you might be tempted to tap into what is likely to be your largest pot – your pension even if you have not retired. Other reasons for taking money from your pension early might include repaying debt such as outstanding mortgage balances, paying for family members' long-term care fees, children's school fees or university costs, or helping children get onto the property ladder.
However, there are a number of reasons why you should avoid touching your pension until you need it for the purpose it is intended – your retirement.