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The average American is saving less for retirement than you might think.

A recent GOBankingRates survey found that 38% of Americans think they will need less than $500,000 to retire a far cry from the traditionally recommended amount of $1 million. However, whether you have $500,000 or $5 million in your savings, the truth is that retirement is not one size fits all. Depending on your financial situation, where you want to retire and what your retirement goals are, the perfect number for you could be far lower or much higher.

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Keep reading to find out if you can afford to retire on less than $500,000, and what your retirement might look like living on these savings.

According to our survey, 38% of Americans think theyll need less than $500,000 to retire, 30% believe theyll need $500,001 to $1 million, 14% believe they will need $1 million to $1.5 million, 8% believe they will need $1.5 million to $2 million, 3% believe they will need $2 million to $2.5 million, 2% believe they will need $2.5 million to $3 million and 6% believe they will require more than $3 million.

The majority of the respondents who believe they will need less than $500,000 to retire were at or near retirement age, as 53% of the respondents in this category were over the age of 65. Only 28% of those ages 18 to 24 stated that they will need less than $500,000.

Additionally, women make up the majority of those respondents who said they will need less than $500,000 to retire, as 44% of women and 32% of men responded in this way.

If you are wondering whether $500,000 is enough money to retire on, the answer is it depends but you can use the safe withdrawal rate to do some quick calculations. The safe withdrawal rate is a general rule of thumb with it comes to retirement planning.

Jay Zigmont, Ph.D., CFP, founder ofChildfree Wealth,breaks it down like this: The general concept is that you can take 4% of your net worth out of your investments each year and not run out of money. On $500,000, that means your expenses will have to be below $20,000 per year, not including any taxes you may have to pay. If you are completely out of debt including your house it may be possible in some areas to live on $20,000, but in most areas, you will barely cover food and healthcare.

You can use the safe withdrawal rate to find an approximate number that you will need in order to afford retirement.

To do rough calculations with the safe withdrawal rate, take your annual expenses and multiply it by 25, Zigmont said. So if you have $40,000 a year in expenses, you will need $1 million to retire. That may seem like a lot of money, but keep in mind you are trying to make your money last the rest of your lifetime.

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After determining whether or not you can afford to retire on less than $500,000, another factor you might want to consider is what retirement might look like with these savings.

Is retiring on $500,000 possible? It absolutely is. Just know it will not be a luxurious or even a comfortable retirement, said Matthew Grishman, principal and wealth advisor at Gebhardt Group Inc. It will be basic subsistence to keep a roof over your head, food in your fridge, clothing on your back, and access to transportation, communication and health insurance. And thats about it.

If you are open to retiring outside of the U.S., you might find it much more accessible to retire luxuriously with smaller savings.

It is absolutely possible to retire on $500,000 or less, especially if you are open to the idea of retiring in a foreign country like Mexico, Panama, Colombia, Costa Rica or Portugal, Grishman said. U.S. expat communities have seen explosive growth in these countries as costs of living for retirees, especially healthcare, continue their rapid ascent upward here in the United States.

If an extravagant retirement on the beach is what youre looking for, you might want to start making some changes now in order to save enough for your ideal retirement.

If you want more in your retirement, you will need to save a lot more than $500,000, Grishman said. Perhaps looking closely at your spending now and eliminating discretionary expenses for a while to allow yourself the opportunity to save will be a worthwhile tradeoff for a more comfortable retirement. Ask for a raise or look for a new job that might have higher pay where you can take that additional income and save it, rather than simply absorbing it into buying a bigger lifestyle.

Consider adding any bonuses or tax refunds you receive into your savings and think about investing beyond your retirement savings account. To boost your savings, consider investing in real estate or cash-flow businesses to help you reach your retirement goals.

More From GOBankingRates

Methodology: GOBankingRates surveyed 997 Americans ages 18 and older from across the country between Aug. 9 and Aug. 11, 2022, asking 16 different questions: (1) How much money do you currently have saved for retirement?; (2) How much money do you think youll need to retire?; (3) Realistically, at what age do you want to be retired?; (4) At what age did you start saving for retirement?; (5) What worries you financially about retirement? (Select all that apply.); (6) Do you plan to work in retirement?; (7) What assets do you have in your retirement portfolio? (Select all that apply.); (8) How has the current inflation impacted your retirement plans?; (9) How much of your retirement do you plan to fund with Social Security?; (10) How do you feel about the future of Social Security when you retire?; (11) What percentage of your salary are you currently investing for retirement?; (12) Are you planning to move after your retirement?; (13) Where is your ideal place to retire?; (14) What government programs do you plan to use for your retirement? (Select all that apply.); (15) Do you have a pension plan?; and (16) How much do you think the average American has saved at the time they retire? GOBankingRates used PureSpectrums survey platform to conduct the poll.

The rest is here:
38% of Americans Think You Need This Much To Retire -- Here's What Experts Say - GOBankingRates