Workers Think They’ll Need $1.8 Million for Retirement. That Doesn’t Mean You Will

One reason so many people struggle to sock money away for retirement is that they don't know what savings goal to target. Should you be aiming for $500,000? $1 million? More?

If you want to follow the findings of a recent Schwab survey, then the magic retirement savings number is $1.8 million, according to workers today.

And to be fair, a number like that is pretty likely to set the stage for a comfortable retirement.

But just because the results of one survey point to needing a $1.8 million retirement nest egg doesn't mean you won't manage just fine with a smaller 401(k) or IRA. Or maybe you'll need a much larger savings balance.

Either way, it's not a good idea to get hung up on a single number. A much better bet is to do some number-crunching of your own.

It's all about you

Just as your expenses at present might differ from those of your siblings or neighbors or friends, so too might your retirement expenses look very different than those of the typical American. As such, there's really no sense in buying into any sort of survey result that tells you that you need X or Y for retirement.

A $1.8 million nest egg might do the trick of giving you the retirement of your dreams. But you also may not need $1.8 million — not if your goal is to live in your modest paid-off home and spend most of your free time being around family and volunteering in your community.

Or, maybe you do need a fair amount of money for retirement because you want to travel a lot. That doesn't automatically mean you need $1.

8 million to your name, though. It may be that $1.2 million allows you to do the things you want without having to compromise.

That's why surveys like these are only minimally helpful. Sure, it's interesting to see what retirement savings target Americans seem to think is the right one. But that doesn't mean the number you see is the one that should apply to you.

In fact, if you want to figure out how much retirement savings to aim for, sit down with a financial advisor and talk through your goals. Describe your ideal retirement and determine where you want to settle down. A small city is apt to offer a different cost of living than a larger one.

Also, think about whether working during retirement is something that appeals to you. For some people, keeping busy is important, and holding down a job is a great way to fill some hours during the week and enjoy some structure.

A $1.8 million retirement nest egg could turn your senior years into everything you've always dreamed of. Or not. So rather than fixate on that number, take it with a grain of salt and start seriously thinking about what you want your retirement to look like. Only then can you make an attempt to come up with a number that's worth pushing for.

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