That's not what it's saying, but I can see how you could interpret it that way since it's not well written.

They say that they took the total annual costs of groceries, housing, transportation, health care, and utilities, added those together, and assumed that those core expenditures probably equated to around 80% of what you actually spend, so they added an additional 20% that you needed in savings to have enough for your actual annual expenditures, which would include stuff like clothing, haircuts/personal services, dining out, gifts, non-local travel, etc.