Middle-aged savers are toying with the idea of withdrawing from their pension savings to invest in buy-to-let property, according to new research.
This comes as official data shows that savers have cashed in £2.4bn from their pots in the past year, sparking concern from industry experts.
Here, we explore the pros and cons of using your retirement savings to invest in property, and highlight the alternatives worth considering.
'We would urge anyone thinking of going down this route to speak to a financial adviser to go through their options.'
Data from HMRC shows that savers withdrew £2.4bn from their pots between July and September this year, an increase of 21% year-on-year.
This opens up the possibility of people making risky and uninformed decisions over how to spend their retirement savings.
Property has historically represented a good investment for many people, with house prices increasing fourfold between 1987 and 2017. And with currently offering little by way of returns, some people are instead pumping their money into bricks and mortar.
The problem is that the market has over the past couple of years. Data from the Land Registry shows that prices increased by just 1.3% in the year to August 2019, compared with 2.7% the previous year, and homes in some areas are now losing value.
While this means you might be able to bag a buy-to-let bargain, stagnating prices place a great deal of stress on how much profit you can make on rental income (known as the rental yield).
A saver withdrawing their full £400,000 pension pot to invest in property in England might pay out a total of £132,400 in tax and stamp duty.
The estate agency Hamptons International estimates it would then take them six and a half years to earn their money back on a buy-to-let.
You'll need to do a significant amount of research to ensure you buy the right type of property in the right area - and even then there's no guarantee of getting a big yield.
The credit broker Totally Money looked at data from nearly 500,000 properties across England, Scotland and Wales, and estimated that actual rental yields run from just 1.95% (the AL5 postcode in St Albans) to 10% (the L1 postcode in Liverpool).
Many of the best yields were recorded in cheaper areas in the North of England and Scotland, while the lowest yields were generally recorded in London and the South East of England.
It's not all bad news for investors, however. The latest rental price tracker from Rightmove shows that a shortage in the number of rental homes on the market means that annual rents are rising by around 5.6% in London and a little over 3% in the rest of the country.
Even if you can find a suitable property, it's currently a very complicated time to become a landlord.
As well as dealing with bread-and-butter issues such as finding tenants, you'll need to battle with ever-changing regulations and increasing amounts of red tape.
If you're thinking of cashing in some of your pension, you don't have to access all of your funds at once.
The FCA says that more than 350,000 pots were fully withdrawn in 2018-19, but that 90% of these had less than £30,000 in savings.
This shows a trend for people with smaller additional pension savings accessing cash, while keeping their main pots for retirement.
Gambling on your retirement income is a significant risk, so you should always take independent financial advice before withdrawing from your pension.
A couple of popular alternatives to full withdrawals are:
Income drawdown will mean your savings will continue to be invested and will allow you the freedom to take out different amounts each year and manage your annual tax liability.
The FCA says 190,971 people used income drawdown in 2018-19.
How much you'll get depends on various factors, including your health, the size of your pot and the rates currently offered by providers.
The FCA says that 73,977 pension plans were accessed to buy an annuity in 2018-19.