If you read personal finance news regularly, you've seen some variation of this headline quite often. It's seemingly a smart question, and $1 million is a nice, round number that sounds like a lot of money.

The reality, however, is that this question is a bit like asking "Are 11 chicken nuggets enough for lunch?" The answer, of course, depends on all the variables. How many people are eating? What are the side dishes? How hungry is everyone?

Retirement isn't one size fits all. $1 million may be a comfortable retirement for some people and a major lifestyle downgrade for others. To figure out how much you need to have in retirement savings, you'll need to figure out how you intend to live.

An hourglass sits next to change.

Image source: Getty Images.

Know your financial needs

To understand how much money you need in retirement, you have to know what you plan to spend in retirement. When you're young that may not be a decision you can make. In your 20s, 30s, and maybe even 40s, you should simply save as much money as you can so you have more flexibility when you hit retirement age.

In your 50s, and certainly your 60s, you probably have a sense of what you hope retirement will look like. You will likely know if you plan to move someplace sunnier and whether you plan to downsize your lifestyle.

At this point, it's very important to start figuring out what your budget will be. You can't know exactly where the housing market will be in 10 or 15 years, but you can at least get a sense of what your current home is worth and the price you will pay for the type of home you want wherever you want to live.

You should also look at your other big expenses. How much you spend on food may not change much in retirement. Transportation, however, may cost less without a commute to work while your travel budget may go up.

How much do you really need?

If you live in a major city and move to central Florida or Arizona, your housing costs will likely decrease. That lowers that part of your budget, but your overall expenses don't necessarily go down just because you've stopped working. You may, for example, plan extensive travel in retirement -- and that comes with a price.

Be honest with yourself. Don't budget for a modest cabin that's off the grid if that's not how you intend to live. You should also factor in the unexpected. You might have medical bills, an unexpected home repair, or another unexpected expense that throws your budget out of whack. Make sure you plan for things to go wrong.

$1 million seems like a lot. But if you hope never to draw down that $1 million and instead live only on the income it produces, it'll only give you somewhere around $20,000 per year at current rates. Since you don't know when you're going to die, it makes sense to take a careful approach. You don't want to spend $100,000 per year of your $1 million, only to run out of money in your 70s.

How much money you need in retirement is a question that has no one answer. Setting a retirement savings goal requires knowing yourself and what your dream retirement looks like.