For many years, $1 million was considered the gold standard for retirement savings, and for some, this hasn't changed much. A recent Schwab survey asked 2,000 adults age 55 to 75 how much they'd saved for retirement, and their average answer was $920,400. Most seemed pretty confident that would cover most or all of their expenses, but the math tells a different story. 

$920,400 doesn't go as far as you'd think

The survey also asked participants how much they thought they'd need to spend annually in retirement to live their best life. The average answer was $135,100. Based on this figure, $920,400 wouldn't even last seven years.

Senior woman with hands clasped in front of her thinking

Image source: Getty Images.

Most households can get by on less than $135,100 per year. If you're just trying to cover basic expenses and maybe have a little extra cash for travel or hobbies, you can cut this number down significantly. That could help extend your savings, possibly for a few decades. 

Yet retirement these days can last 30 years or more. If you're spending even a third of the survey's "best life" annual estimate (about $45,000), you'd need approximately $1.35 million to cover all of your expenses for 30 years, and that's before inflation. Social Security and possibly a pension may make up some of the difference, but there's a definite chance that some of these individuals come up short in retirement.

There's also a possibility that some of them end up just fine, especially those who spend less or have saved more than the average listed above. That's because there isn't really an easy retirement savings standard we can all aim for. It all depends on your situation.

How to find your retirement number

Retirement averages like those mentioned above aren't very useful because you don't know anything about the lifestyle or goals of the people surveyed. And in this case, most of those surveyed were older adults who are nearing retirement or are there already, so what they need is quite different from what most of today's workers will need. 

Inflation is going to drive up costs over the next few decades, like it always does, so today's workers will need even more to retire comfortably. They're also less likely to have pensions through their jobs, so they must save even more on their own to have enough.

It's impossible to predict with accuracy how much you'll need for retirement, but you can get close with some educated guesses. First, determine the length of your retirement by subtracting your chosen retirement age from your estimated life expectancy. Plan to live into your 90s unless you have good reason to believe you won't. It's better to overestimate here than to underestimate.

Next, determine your annual living costs in retirement. You may use your current expenses as a baseline, but adjust them based on how you expect them to change between now and retirement. For example, you won't have to save for retirement once you're there, and you probably won't have to care for your children, so you can exclude these costs. But you might spend more on travel or healthcare than you do now, so bump up your estimates for these things.

Then, put this information together. A retirement calculator can do this for you, or you can figure it out yourself by multiplying your estimated annual retirement expenses by the number of years of your retirement, and adding 3% annually for inflation. This will give you the total estimated cost of your retirement, but you don't have to save this all on your own.

A lot of your retirement savings will come from investment earnings. Your retirement calculator can help you estimate how much this might amount to. Use a 5% or 6% average annual rate of return in your calculations. Your money might grow more quickly than this, but this way, your retirement plan won't be derailed if it doesn't.

You may also receive some money from a 401(k) match, Social Security, or a pension. Talk to your employer to figure out how much your pension or 401(k) match might be worth. You can also create a my Social Security account to estimate your future benefit at different ages. Subtract all these things from your total retirement costs to figure out how much you must save on your own. Your calculator should also tell you what you need to save per month to reach your goal.

Be flexible

Don't get discouraged if you find out your ideal retirement plan isn't feasible or you're a little off track. Retirement planning isn't a one-and-done thing. It's not realistic to think that nothing will change between now and your retirement. Your investments might do great one year and poorly the next. You might change jobs, which changes how much you can afford to save. Or your interests -- and by extension, your plans for retirement -- might change as you age.

All these things require you to revisit your plan and make adjustments. Do this at least once per year or whenever you experience a major shake-up to your household finances so that you can get back on track as quickly as possible.