Many seniors end up relying heavily on Social Security to pay the bills in retirement. But in reality, those benefits only replace about 40% of workers' pre-retirement wages among average earners. That's generally not enough replacement income to live on.

It's for this reason that workers are advised to save consistently for retirement throughout their careers. Entering retirement with a healthy nest egg is a great way to supplement Social Security income and avoid financial struggles later in life.

How much money should you be saving? As a general rule, it's a good idea to kick off retirement with about 10 times your ending salary socked away in an IRA or 401(k) plan. But many of today's older workers may be falling short in that regard.

Person reading book on couch

Image source: Getty Images.

The median retirement savings balance among baby boomers is $202,000, according to the 21st Annual Transamerica Retirement Survey. And while older workers have managed to accumulate a lot more savings than their younger counterparts, those entering their senior years with $202,000 could wind up disappointed.

Is $202,000 enough to retire on?

It's easy to look at a number like $202,000 and think that it's a nice sum of money. But for many seniors, their nest eggs will need to last 20 years or longer. And that makes $202,000 look a lot less impressive.

If we apply a 4% annual withdrawal rate, which financial professionals have long recommended, to a savings balance of $202,000, that amounts to just over $8,000 a year income from withdrawals. Granted, that's on top of whatever income comes in from Social Security and other sources. But on its own, it's certainly not a whole lot.

How do your savings compare?

If you're in your 30s or 40s with a retirement plan balance somewhere in the ballpark of $202,000, you may be in pretty good shape, since you still have many working years ahead of you to grow that balance. But if you're an older worker with $202,000 saved and the end of your career is right around the corner, you may have to rethink some of your retirement plans.

Unfortunately, $202,000 in savings may not get you very far if that and Social Security are your only income sources. If that's the case, it pays to:

  • Ramp up your savings rate as much as you can between now and when you stop working
  • Extend your career a few more years to eke out more saving
  • Delay your Social Security benefits until age 70 to grow them into a larger sum (something you may need to extend your career in order to do)
  • Retire in a part of the U.S. where the cost of living is cheaper
  • Consider working part-time in retirement to generate income

It's encouraging to see that today's workers are saving for retirement. Unfortunately, $202,000 in savings may not provide enough income for a comfortable lifestyle.

If you're nearing retirement with $202,000 in savings or less, you may need to make some adjustments to your plans. But the good news is that if you do, you might manage to avoid the financial stress so many of today's seniors face.