The Bavarians welcome the Reds to the Allianz Arena for the second leg of their last-16 tie on Wednesday after their first meeting ended goalless at Anfield.
Matthaus, who won seven Bundesliga titles and the UEFA Cup with Bayern during his playing career, as well as the World Cup with Germany, is wary of the threat posed by Jurgen Klopp’s side on the counter-attack.
"0-0 is a decent result on the face of it but of course Bayern don't have an away goal, and that's all the more dangerous when you're playing Liverpool, who carry a huge attacking threat," he told Sky in Germany.
"Bayern have to find the right balance - don't concede, and score one themselves, that's all they need.
"But the balance is very important - and also very dangerous: a bit too attacking, and Liverpool can exploit that; too defensive, then that'll maybe reduce Bayern's own attacking threat.
"They've got to score a goal somehow, because I don't believe that in a game like this you can aim for a 0-0."
"You start with a solid defensive game, in the same way they played in Liverpool, but definitely not too defensive.
"Firstly they're playing at home, and secondly they've got to get a goal, but actually in recent weeks Bayern have been good at the back, compact, and that's how you keep in check a strong attack like Liverpool's.
"You can't throw everything at Liverpool from the start, no coach would be that crazy, because we know how strong Liverpool are, and that's why the approach in the first leg was a bit more cautious than in other Champions League games."
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