The poll, which questioned more than 1,000 pre-retirees, found the joint top reason for taking out taxable cash from their pensions was to "save for a rainy day".
Andrew Tully, pensions technical director at Retirement Advantage, said using taxable pension savings to put aside money for a rainy day was "bonkers".
He added that it demonstrates how poorly people understand the tax implications of pension freedoms.
Other reasons for cashing in included to generate an income (28%), pay off debts or meet other financial obligations (17%), and pay off a mortgage (12%).
Around 17% said they would use taxable cash to make home improvements, with 8% wanting to "gift" money to family members.
Meanwhile, 15% used the money to pay for "the holiday of a lifetime" and 11% bought a new car.
"While paying off debt can be a good use of the money, stripping out cash from a pension to save it for a rainy day is frankly bonkers.
"You might be surprised at just how much tax you will pay on any withdrawal, before you consider how little interest you will earn on savings at the moment," said Tully.
'Making poor decisions'
He urged people to remember that the purpose for long-term saving was to fund retirement.
"The pension changes have given people the opportunity to take control, but, left to their own devices, many are at risk of making poor decisions.
“Pension Wise and financial advice should be promoted at every opportunity if people are to avoid costly and irreversible mistakes,” added Tully.
Retirement Advantage's findins are the latest piece of research to suggest the pension freedoms, introduced in April last year giving people unrestricted access to their savings, are leading people to make poor decisions.
In August, research by the Citizens Advice Bureau (CAB) has found that British savers are being hit with unexpected tax bills after taking money out of their pension pots, with the organisation calling on the government to improve access to financial advice.
In the same month, the Association of British Insurers (ABI) warned that a small minority of British savers are withdrawing too much cash from their pension pots and are at risk of running out of money within a decade or less
However, latest HMRC data shows that nearly £7.6bn ($9.2bn, €8.5bn) has been paid out of UK pensions since reforms came into effect, with a greater number of people cashing in smaller amounts, to less than £10,000 of cash.