Most people think of retirement as a chance to enjoy hobbies, spend more time with family or maybe travel a little. But many seniors are facing a new reality of working in retirement in order to make ends meet.

Linda Estridge recently attended a senior job fair in Knoxville in hopes of finding a way to earn supplemental income following a long career in mental health care and retail.

"We have to go back to work. You cannot live on Social Security, and I have a small retirement," Estridge said. "I worked at Sears for 33 years, but I took my retirement early and so it's a minimal pension."

Estridge also worked at Peninsula Outpatient Services until retiring from there in February 2015.

"I had this picture of working on crafts, quilting, gardening. (That's) not happening except if I have a day off," she said.

Estridge is also raising two grandchildren, meaning her small savings doesn't go very far.

"You cannot live on Social Security and pension. You have to have that extra income. I'm over the income cap for any type of assistance, but I don't make enough to live on," Estridge said.

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As our population ages, many Baby Boomers are finding themselves in a similar situation. Americans are living longer than ever, meaning we need to save even more money to cover the cost of health care and long-term care in retirement.

Certified Financial Planner Paul Fain says the biggest challenge seniors and their families face is the rising cost of care.

A 65-year-old healthy couple can expect to spend an average $266,600 over the course of their retirement, Fain said.

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Fain says the average annual out-of-pocket spending for recurring health care costs for a couple age 65 or older is $7,725. That includes premiums and doctors visits. For a couple age 85 and older, the average is $28,644. He says those figures do not include long-term care expenses.

The best thing to do, he says, is to start saving now. Fain says you can use the following benchmarks to know if your savings are on track to cover your retirement expenses:

By age 35: 2 x Salary
By age 45: 4 x Salary
By age 55: 6 x Salary
By age 65: 8 x Salary

Another tip is to follow what Fain calls "the rule of 10," which means:

  • Save at least 10 percent of your salary in a Health Savings Account, IRA, 401k
  • Save up to 10 times your salary by retirement
  • Budget at least 10 percent of your retirement income for health care