Many of us tend to have preconceived notions about retirement and how to plan for it. But some of the challenges retirees face aren’t so obvious.

We spoke with Jamie Hopkins, author of Rewirement: Rewiring the Way You Think About Retirement!, about some of these hidden challenges and how to successfully navigate them for a happy retirement.

Spending’s as Important as Saving

Most retirees know how to accumulate assets, but when it comes time to plan how to disperse or spend those assets, many don’t know where to start.

Hopkins pointed out that Most of the laws, rules and retirement plans in place are set up to help us save. They’re not designed to help us spend money. Retirees need to adapt their mindset to this way of thinking about retirement.

Part of the issue is there are a lot of behavioral biases, Hopkins noted, which encourage retirees to forgo this part of the planning process. Problems with what are called anchoring or home bias, Hopkins added, mean retirees are reluctant to give up something they’ve worked so hard to earn.

“We get a lot of retirees that don't want to spend down their savings, don't want to spend down their investments and try to live off of interest only,” Hopkins said. “In today's interest rate environment, that's very challenging to do and meet your lifetime goals.”

Unpopular Products Can Save Retirement

Hopkins noted financial literacy and biases are part of the issue. For example, many investors dislike the idea of annuities. But these products can be incredibly powerful and beneficial in retirement.

An advisor can be an indispensable part of the planning process. The conversation should start with the retiree’s goals, and especially how much income they want to guarantee in retirement.

That’s where annuities are so powerful. When it comes to guaranteed fixed income, retirees only have three options: the government, CDs issued by a bank, or annuities through an insurance company.

If we look at these three, with interest rates where they are today, annuities will provide higher payouts that are guaranteed.

Many investors don’t like the idea of their principle locked up in an annuity, but they would otherwise have to set aside even more money to guarantee similar income, Hopkins noted. Professors and academics love annuities because research shows they help improve retirement outcomes, he added. Plus, they guarantee income that someone can’t outlive.

“For whatever reason, the name scares people away,” Hopkins said. “There are much more complicated annuities out there too that work more like investment products. Those still have a role in the world, but I think they fog the mirror for some people… annuities can be very simple and very beneficial in a retirement income plan.”

Other Successful Strategies

Hopkins noted delaying retirement can be a powerful tool.  Recent research from Sandford found working a couple months longer was equivalent to saving for an additional five years.

Other sources of part-time work or side income are extremely beneficial, too. This can keep retirees engaged and help bolster their overall financial situation.

Deferring Social Security can also be extremely useful in many cases, Hopkins noted. The eight percent bump retirees earn by delaying past their regular retirement age can mean adding the equivalent of hundreds of thousands of dollars in capital that would otherwise be required to generate that income.

Other powerful options include tapping home equity or even using reverse mortgages. Many people are similarly afraid of these products, Hopkins pointed out, but they’re often misunderstood and can have substantial benefits as part of the planning process.

 “None of these strategies or products are for everyone, but home equity is America's largest asset,” Hopkins said. “In my view, ignoring that as part of a retirement plan is just not OK. … There are a lot of strategic things out there, but again, if we review all this stuff inside of a plan that takes a holistic view, we're going to be in a much better place than if we react to everything behaviorally, based on fear and biases. … We've got to be prepared to have some flexibility and have a plan in place that puts us on a trajectory to get there. That's how we're going to be successful.”