Americans think it will take $1.9M to retire. Are they right?

You may be able to live well as a senior on much less than the typical retiree

Retirement can be a scary prospect. In exchange for the freedom of not having to report to an office every day, you're instead propelled into a situation where you're forced to live on a fixed income. That's why it pays to save as much for retirement as you possibly can. The stronger your nest egg, the greater your chances of managing to cover your expenses and live comfortably.

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How much money should you aim to save? Well, it depends. Americans think they'll need $1.9 million in savings, on average, to enjoy retirement, according to a recent Charles Schwab study. But, in reality, you might manage to live on a lot less.

Do you really need $1.9 million for your senior years?

The amount of money you wind up needing during retirement will depend on a number of factors -- your health, your lifestyle, and your goals. As such, you don't necessarily need to push yourself to amass a $1.9 million nest egg if you're planning to live modestly.

The average senior today collects about $18,000 a year in Social Security. Now, say you manage to sock away $950,000 -- half of $1.9 million -- and that you withdraw from your savings at an annual rate of 4%. That will give you a total of $56,000 a year in income, and that's not terrible if your home is paid off, you settle down someplace where the cost of living is reasonable, and you're not planning to spend your senior years trotting the globe.

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On the other hand, if you're planning to maintain an expensive home in retirement that isn't paid off in time for your senior years, and you intend to do a ton of traveling, then you may need to get closer to that $1.9 million mark.

Thankfully, that may be more doable than you think. If you manage to set aside $800 a month, or just under $10,000 a year, for retirement over a 40-year time frame, and your invested savings generate an average annual 7% return on investment, which is a few percentage points below the stock market's average, then you stand to retire with just over $1.9 million.

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Of course, you may not have 40 years until retirement, and the less time you have, the more money you'll need to set aside each month to reach that $1.9 million target. But rather than obsess over that figure, you might instead take some time to think about what you want your retirement to look like. Maybe you don't need the larger house or the fancy travel; maybe you're content staying close to home and spending your days hiking, gardening, and doing other such rewarding activities that don't require you to enter your senior years with nearly $2 million to your name.

Just because Americans think they'll need an average of $1.9 million to retire doesn't mean you'll need that much. Map out your goals and set a savings target that's reasonable for you based on your income and savings window. You may find that you're able to live well as a senior on much less than the typical retiree.

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