Will pensioners buy Lamborghinis? That has been the big question in the air ever since chancellor George Osborne uptipped the savings applecart last year and heralded the new “pension freedoms”.

Now, anyone saving into a non final salary pension knows that when they hit 55, the pot they have amassed can be turned into cash – though not without ifs and buts involving taxation and charges.

Last week, the Association of British Insurers reported that almost £5billion has been withdrawn from pensions since the freedoms were launched in April. Some £2.5bn has been taken out in cash lump sums, the trade body says, while £2.2bn has been paid out through income drawdown products.Withdrawals have continued at the same levels in the past quarter as in the first three months of the new regime, contrary to predictions that they would slow down.

It was LibDem pensions minister Steve Webb who framed the Lamborghini question, and was quite relaxed about it, since when several pension brokers and providers have said they see little evidence of irresponsible retirement blow-outs.

But how will it affect new retirees who, after a working life expecting to have to buy an ‘annuity’ paying out a regular income until death, now find themselves holding a lucky lottery ticket?

Research last week from the Social Market Foundation says the experience of Australia and the US shows the potential downsides of the brave new world, and that pension freedom poses “serious long-term financial risks to retirees and taxpayers”.

The report, Golden Years? What freedom and choice will mean for UK pensioners, says few Australians or Americans choose to secure a guaranteed income for life. Instead it found three types of behaviour which were common among retirees

• ‘Cautious Australians’ who preserve their capital by reducing it by less than one per cent a year.

• ‘Quick-spending Australians’ who consume pension funds quickly, with four out of 10 running out by age 75.

• ‘Typical Americans’ who on consume pension savings quite quickly with an average withdrawal rate of eight per cent a year.

Using new modelling from the Pensions Policy Institute, the report says UK retirees emulating the typical American or spend-happy Aussie would exhaust their pensions by year 17 and year 10 respectively of their retirement– long before they reached average life expectancy.

“Those who use the new rules to access pension cash early in retirement may maintain their working-life standard of living for a while, but risk it falling sharply in later life compared to those who choose sustainable income and more even consumption,” says the report.

“State pension and benefits may keep retirees above the definition of poverty, but their incomes risk sinking towards poverty levels if too much pension is taken too early.”

However it is not plain sailing for those following the cautious Australian model either. They face a very low risk of running out of savings, even if they live longer than average. “But this comes at the cost of reduced incomes and lower living standards throughout retirement.”

The new product of choice is not an annuity but income drawdown. Last week market leader Royal London, a mutual which employs1100 in Scotland, reported a surge in profits from drawdown as the new regime kicks in, with sales up by two-thirds to almost £1bn.

But the SMF warns that drawdown brings the risk of variable investment returns, resulting in uncertainty of income in retirement and of when savings may unexpectedly run out.

Taxpayers could end up footing the bill. In Australia, a quick spender using up his pension pot of £184,000 too early would cost the state at least £10,000 more by age 87 than had he bought an annuity, the report says.

The research also suggests particular groups may be more vulnerable to “poor outcomes”: women, early retirees, those who access their pension savings before retirement, and those without any other assets.

It recommends a ‘retirement risk dashboard’ for the government, monitoring statistics such as pension balances, pension cash withdrawal, insurance take-up, levels of investment risks and take-up of guidance and advice.

For consumers there should be ‘personal pension alerts’ aimed at the more vulnerable groups, and including targeted support and advice, initiatives to “make retirees think twice before taking one-off decisions such as withdrawing all their pension savings”, and, a mid-retirement financial health check to encourage older people to reconsider their financial position.

Nigel Keohane, the SMF’s director of research said: “If we really want to know how pension freedom is progressing and avoid detrimental consequences, we need to introduce an early warning system to monitor retirement decisions, understand the long-term implications and ensure consumers receive the right support.”

Tom McPhail, head of retirement policy at brokers Hargreaves Lansdown, said: “For most retiring investors, a ‘mix and match’ strategy will work best, using a combination of state pension, annuity purchase and drawdown to pay occasional lump sums and an investment income. There is no one size fits all strategy though, nor is there any simple default. Every retiring investor must explore their options and decide what will work best for them.”