"Envisage" isn't too formal or literary, but it isn't a very common word either. I would think of it as coming from French: en = in; visage = sight. So the image, the picture, the idea is coming into sight, we 'see' it in our minds, we dream it, etc. If I envisage retiring at age 60, then I am 'seeing' that possibility, I imagine it, I conceptualise it. It's not exactly 'to intend to do something', but rather, I imagine/see that particular event happening.