Saving for retirement is essential. If you decide to fall back on Social Security alone, you'll potentially subject yourself to years of financial hardship, especially since the average benefit today amounts to just $1,543 a month.

Of course, you're no doubt aware that the more you save for your senior years, the more financial security you'll buy yourself. But how much money should you aim to have socked away?

If you follow the results of a recent Charles Schwab survey, then the answer is "a lot." Those who participated in that survey landed on $1.9 million as the magic retirement savings target everyone should attempt to accrue. But is that the amount you should be trying to save?

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A better approach to mapping out your savings goals

The amount of money you end up needing as a senior will hinge on certain factors:

  1. Your wages during your working years.
  2. The percentage of your salary you're hoping to replace as a senior.
  3. Where you plan to live in retirement.
  4. The retirement lifestyle you plan to lead.

If you spend the last 20 years of your career earning a six-figure salary, and you effectively want the same annual income during retirement, then yes, you may need to aim to sock away $1.9 million, or something in that vicinity.

Similarly, if you plan to lead a lavish lifestyle in retirement -- one that has you traveling extensively, spending your afternoons at the country club, and living it up in an expensive city -- then you may need a $1.9 million nest egg to achieve those goals.

But what if your retirement plans are a lot more modest? What if you know that you'll be happy living in a modest cottage in the woods or in an inexpensive suburb? And what if you plan to spend most of your newfound free time bonding with your grandchildren, gardening, volunteering, and taking inexpensive day trips when you can? If that's the case, then you may not need anything close to $1.9 million for retirement.

In fact, say you're used to living on $50,000 a year right now, and you want the same annual income once you stop working. If you're eligible for the average monthly Social Security benefit, that means about $18,500 a year of income can come from that alone, leaving you to rely on your nest egg to provide a little over $30,000 a year. In that case, an $800,000 retirement savings balance easily gets you to that goal if you withdraw from your nest egg at a rate of 4% a year.

Don't fixate on that $1.9 million

Rather than worry about saving $1.9 million for retirement, a better bet is to think about your personal goals and aim for an ending savings balance that works for you. You may find that saving $500,000 lends to the retirement of your dreams. Similarly, you might manage to sock away $1.9 million for retirement, only to realize that it's not enough to help you meet your goals.

The point, either way, is to use that $1.9 million figure as a point of information only -- not gospel. Keep in mind, too, that the aforementioned survey was conducted among 1,000 Schwab 401(k) plan participants. That's hardly a large sample set in the grand scheme of the U.S. adult population. So it's important to take that $1.9 million figure with a massive grain of salt.