One in four (26 per cent) retirees returned to work after dipping into their pension because they were struggling financially, according to research.
The analysis from Zurich, which polled 2028 adults who have accessed their defined contribution pension, found that one in 10 (11 per cent) had gone back to either full or part time work, or said that they intended to.
Since the pension reforms were introduced in 2015, savers have been able to take a 25 per cent tax free lump sum from their pension, and draw money flexibly if they have a DC pot.
Latest figures from HM Revenue & Customs showed more than half a million over-55s withdrew £8.18bn from their pension pots in 2017-18, a jump of 23 per cent compared to the previous year.
In total, savers have withdrawn £25.6bn since the start of pension freedoms in April 2015.
According to Alistair Wilson, Zurich’s head of retail platform strategy, the pension freedoms have been hugely popular but for some retirees they have come at a high price.
He said: "People now face more complicated decisions in retirement – including choosing where to invest their savings and how much to withdraw - and it’s clear not everyone is getting it right.
"Pensioners who don’t plan for retirement, and get financial advice or guidance, could face a return to the grindstone or an impoverished old age."
Mr Wilson noted that making a mistake with their pension in later life could be financially devastating – especially if the saver can’t go back to work.
He added: "One of the most important steps you can take is to calculate how much you have to live on.
"By working out your income and expenditure, and considering how long you might need to make your savings last, you can reduce the risk of emptying your pension too soon.
"There’s a lot to think about when you’re planning for retirement, and your circumstances will change over time, which is why it’s often best to speak to a financial adviser."
Martin Bamford, chartered financial planner and managing director of Informed Choice, noted that retirees returning to work was a growing phenomenon.
He said: "It’s often the result of a poorly designed plan for how to spend time in retirement, although financial issues can also prompt a return to paid employment.
"For a great many retirees, giving up work altogether is a terrible idea, in financial and life fulfilment terms."
He added: "We gain a great deal of our self-identity and social interaction from work, which can leave retirees feeling isolated and lacking purpose, unless they can replace these elements from work with other interests.
"The most successful retirements are those which address the financial requirements and a sense of continued purpose."
maria.espadinha@ft.com
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