When you’re ready to take an income in retirement you’ll need to make some decisions about what to do with your pensions pot(s). Since ‘pension freedoms’ was introduced in 2015 you have greater choice and flexibility in how you set up your retirement income.

You’ll need to decide whether to take a cash lump sum, and select the type of income that’s right for you. There are different ways you can choose to take your income:

• Guaranteed income for life (annuity)

Choose a guaranteed income for life, also known as an annuity, and you'll receive a regular income for the rest of your life. However, you can't vary the income if your needs change nor can you cash in your plan at any time.

There are options available at the outset that enable you to protect your loved ones on your death. Find out more about annuities.

• Flexible income (income drawdown)

You can leave your money invested in funds of your choice and take whatever you want, whenever you want - but your income isn't guaranteed. If your investments perform well you could increase the income you take.

On the other hand, if you withdraw too much too soon, or your investment funds perform poorly, you could run out of money. On your death, what's left in the fund is paid to your beneficiaries. Find out more about income drawdown.

• A combination of both guaranteed and flexible income

You don't have to choose between a flexible income and a guaranteed income. You can use part of your pension pot to provide a guaranteed income and put the rest towards providing a flexible income.

For example, you might choose to buy a guaranteed income to cover essential expenses that have to be paid and leave the rest invested to dip into whenever you want to.

The choices you make will impact the rest of your life and so it’s advisable to seek guidance and take advice if required. You can find out more about the options available to you here.