Securing a livable income after you leave the workforce is no small task. Most of us have to save for decades, often with little insight into whether we're doing enough.

If you're not sure how your retirement prospects are shaping up, it's time for a walk-through of what it really takes to earn the retirement income you need. Here's a look at how an average senior can earn $60,000 a year after leaving the workforce. Use it as a model for shaping your own retirement savings plan.

Understanding your retirement income needs

Your retirement saving plan hinges on the income you need your savings account to produce. The challenge is that you may not have a good sense of what that income number is.

There are two reasons for this. First, inflation will increase your cost of living from what it is today. Depending on how far away retirement is, that increase could be significant. And second, the income you need from your savings will vary based on what you earn from Social Security

Alarm clock next to a savings jar.

Image source: Getty Images

Let's tackle the inflation question first. Inflation has been running at about 2% annually in recent years. You can use a future inflation calculator to project how that 2% rate affects your living expenses over time. As an example, the average worker -- let's call him Bob -- making $51,688 annually today will need $63,007 to cover his current lifestyle in 10 years.

Turning to Social Security, you can also estimate that fairly easily. Hop over to the Social Security website and search for the quick calculator. You'll provide your birthdate and current income, and then select the option to see your benefit estimate in inflation-adjusted dollars.

Going back to our average worker Bob, let's say he's 60 years old. Using a 1960 birth year and a salary of $51,688, the quick calculator projects monthly benefits of $1,957 at the Full Retirement Age (FRA) of 67 or $2,724 at age 70. Those numbers equate to an annual income of $23,484 when Social Security is claimed at 67, or $32,688 if the benefit is taken at age 70. The $9,204 difference is due to delayed retirement credits, which increase the benefit for each month you delay your claim beyond your FRA. Delayed retirement credits stop accruing on your 70th birthday.

The table below shows the estimated income Bob requires from his savings to supplement Social Security and bring his combined annual earnings to $63,007.

Social Security Claiming Age

Estimated Social Security Benefits

Income from Savings

Total Retirement Income

67 (FRA)








Table data source: and author calculations

Depending on when Bob retires, he needs $30,000 to $40,000 annually from his savings to maintain his current lifestyle. We can roughly translate those income numbers into savings targets with a multiplier of 25. That would allow Bob to withdraw 4% from his retirement account each year. Using that multiplier gets us to Bob's targeted savings balance at retirement of about $750,000 to $1 million.

Reaching your target savings balance

If you've been making your own calculations along the way, you may have just realized your savings progress isn't where you'd like it to be. Bob's certainly isn't. The average retirement savings for a 60-year-old worker is just short of $200,000. That puts average Bob at least $550,000 short of his goal, with only 10 years left to save.

To catch up in that period of time, Bob would have to save about $2,200 monthly in a tax-deferred investment account that grows at 7% after inflation. That's pretty unrealistic for someone who makes $51,688 a year.

You can use a compound interest calculator to estimate the monthly contributions you'll need to reach your target savings goal. Hopefully, your savings shortfall isn't as extreme or you have more than 10 years available to make up the difference. If time is on your side, great. Don't waste it. Start saving and investing as much as possible right now.

If you're close to retirement but far from your savings target, you may need to redefine your lifestyle so you can cut back on expenses. Consider all of your options, even extreme ones like downsizing your home or moving in with your kids temporarily. Also, look for ways to increase your income. You want to free up as much cash as possible to fund that savings account. It may be worth it to work extra hours or take on more responsibility for higher pay -- at least for a few years.

As you can see from our numbers above, delaying Social Security until your 70th birthday also makes a difference. That's only an option, though, if your health allows you to keep working.

Don't be casual about saving 

Even a modest retirement income level of $60,000 a year is tough to generate if you're casual about saving. The most reliable way to create the retirement you want is to get serious about padding that savings account today.