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Money quiz: Are you financially fit?

Try Fidelity's financial literacy pop quiz.

Think you’ve got your money game on lock? Whether you’re just starting to save, trying to invest smarter, or figuring out how to stretch your paycheck, this quiz is your chance to test your financial knowledge—and pick up a few tips along the way.

Let’s see how your money smarts stack up!

1. According to Fidelity, at least what percent of income should you save for retirement annually?

A) 5%

B) 10%

C) 15%

D) 25%

Open for answer

Answer: C (15%)

Fidelity suggests saving at least 15% of your pre-tax income each year—including any employer match—to stay on track for retirement. If that feels out of reach, try to capture the full employer match and increase your savings rate as your income grows. The key is consistency and progress over time.

Read Fidelity Viewpoints: How much should I save for retirement?

2. What is Fidelity’s recommended starting point for emergency savings?

A) $500

B) $1,000

C) One month of rent

D) 10% of your annual income

Open for answer

Answer: B ($1,000)

Fidelity recommends starting with $1,000 in emergency savings to cover unexpected expenses like car repairs or medical bills. From there, aim to build up enough to cover 3 to 6 months of essential expenses.

Read Fidelity Smart Money: Guide to emergency savings

3. Where should you keep your emergency savings, according to Fidelity?

A) In a long-term CD

B) In a retirement account

C) In a liquid, interest-earning account like a savings account or money market fund

D) In stocks for higher returns

Open for answer

Answer: C (In a liquid, interest-earning account like a savings account or money market fund)

Fidelity suggests keeping emergency savings in an account that is both accessible and stable, such as a savings or money market account. This helps to ensure your money is available when you need it, without the risk of market losses.

Read Fidelity Viewpoints: How much to save for emergencies

4. What’s one major benefit of investing early?

A) Avoiding taxes

B) Higher short-term gains

C) Taking advantage of potential compounding

D) Guaranteed profits

Open for answer

Answer: C (Taking advantage of potential compounding)

Investing early gives your money more time to benefit from any potential compound interest—where your earnings may generate their own earnings. Over time, this effect can significantly increase your total returns.

For example, a $6,000 investment earning 3.5% annually would grow to about $8,460 with compounding over 10 years, compared to just $8,100 with simple interest, or when interest payments are based only on the principal. Any accumulated interest does not impact future interest payments.1

Find out more about this key money principle. Read Fidelity Smart Money: What is compound interest?

5. Which investment type is generally considered lowest risk?

A) Individual stocks

B) High-yield bonds

C) Money market funds

D) Real estate

Open for answer

Answer: C (Money market funds)

Money market mutual funds are among the lowest-volatility types of investments. The returns on money market funds are generally not as high as those of stocks or bonds but they do seek to provide stability—which makes them a potentially versatile option for many types of investors.

Read Fidelity Learn: What are money market funds?

6. What is a Roth IRA?

A) A type of investment that guarantees returns

B) A retirement account funded with after-tax dollars that grows potentially tax-free

C) A savings account that is only available after age 40

D) A government-issued pension plan

Open for answer

Answer: B (A retirement account funded with after-tax dollars that grows potentially tax-free)

A Roth IRA is an individual retirement account (IRA) you fund with after-tax dollars. Your investments have the potential to grow tax-free and may be withdrawn tax-free, provided certain requirements are met.2

Read Fidelity Smart Money: What is a Roth IRA?

7. How much should you aim to save for retirement by age 30, according to Fidelity?

A) 1 years’ worth of salary

B) 2 years’ worth of salary

C) $50,000

D) $100,000

Open for answer

Answer: A (1 years' worth of salary)

Aim to save 1 year’s worth of salary by age 30. Fidelity’s guideline suggests aiming to have 10 times your final salary saved by age 67.3

Remember, it’s a benchmark—not a deadline. If you feel behind, focus on progress, not perfection.

Read Fidelity Viewpoints: How much do I need to retire?

8. Which of these is not a tax-advantaged account?

A) 529 Plan

B) IRA

C) 401(k)

D) Taxable brokerage account

E) Health savings account (HSA)

Open for answer

Answer: D (Taxable brokerage account)

While 529 plans, IRAs, 401(k)s, and HSAs all offer tax advantages—such as tax-deferred growth or tax-free withdrawals for qualified expenses—a taxable brokerage account does not. However, it offers flexibility and access to a wide range of investments, making it a valuable complement to tax-advantaged accounts.

Read Fidelity Viewpoints: Investing beyond your 401(k)

9. According to Fidelity, what’s a quick way to estimate how much you need to retire early?

A) Multiply your annual income by 10

B) Save 25% of your income each year

C) Multiply your annual expenses by 33

D) Use your current age times 1,000

Open for answer

Answer: C (Multiply your annual expenses by 33)

Fidelity suggests multiplying your annual expenses by 33 to estimate how much you may need to retire early, assuming a conservative 3% annual withdrawal rate.4

Read Fidelity Viewpoints: How to retire early in 8 steps

10. What’s the purpose of a W-4 form?

A) It tells your employer how much money to withhold for taxes

B) It is used to apply for a credit card

C) It helps you calculate your credit score

D) It is required only for self-employed individuals

Open for answer

Answer: A (It tells your employer how much money to withhold for taxes)

Filling out a W-4 form correctly helps you avoid surprises at tax time and may help accelerate more money into your paycheck if you tend to get a big refund.

Read Fidelity Viewpoints: Guide to the W-4

11. What is one way to potentially reduce your taxable income?

A) Claim the standard deduction twice

B) Delay filing your tax return

C) Contribute to a retirement account or health savings account (HSA)

D) Pay off your credit card balance early

Open for answer

Answer: C (Contribute to a retirement account or health savings account (HSA))

Contributions to accounts like 401(k)s or HSAs are often made with pre-tax dollars, which can lower your taxable income for the year. Contributing to a traditional IRA may offer a tax deduction. This not only helps you save for the future but can also reduce your current tax bill—making it a smart move for both short- and long-term goals.

For more ideas on reducing taxable income, read Fidelity Viewpoints: 8 ideas to tackle tax bracket creep

How’d you do?

Score yourself!

  • 8–11 correct: You’re a financial rock star—keep it up!
  • 5–7 correct: Solid foundation! A few tweaks could take you far.
  • 0–4 correct: No worries—everyone starts somewhere. Let’s build your confidence together.

Remember: Financial literacy is a journey, not a destination. Every step you take—whether it’s learning a new term or opening your first investment account—brings you closer to your goals.

Ready to level up your financial game? Explore Fidelity Learn for tools, guidance, and step-by-step resources to help you save smarter, invest with confidence, and plan for what’s next.

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This information is intended to be educational and is not tailored to the investment needs of any specific investor.

 1. This hypothetical example assumes the following: (1) An initial $6,000 contribution and no additional contributions; (2) An annual rate of return of 3.5% that accrues as simple and compound interest. (3) The ending values do not reflect taxes, fees, inflation, or withdrawals. If they did, amounts would be lower. This example is for illustrative purposes only and does not represent the performance of any security. Consider your current and anticipated time horizon when making an investment decision, as the illustration may not reflect this. The assumed rate of return used in this example is not guaranteed.

2. 

For a distribution to be considered qualified, the 5-year aging requirement has to be satisfied, and you must be age 59½ or older or meet one of several exemptions (disability, qualified first-time home purchase, or death among them).

3. 

Fidelity has developed a series of salary multipliers in order to provide participants with one measure of how their current retirement savings might be compared to potential income needs in retirement. The salary multiplier suggested is based solely on your current age. In developing the series of salary multipliers corresponding to age, Fidelity assumed age-based asset allocations consistent with the equity glide path of a typical target date retirement fund, a 15% savings rate, a 1.5% constant real wage growth, a retirement age of 67 and a planning age through 93. The replacement annual income target is defined as 45% of pre-retirement annual income and assumes no pension income. This target is based on Consumer Expenditure Survey (BLS), Statistics of Income Tax Stat, IRS tax brackets and Social Security Benefit Calculators. Fidelity developed the salary multipliers through multiple market simulations based on historical market data, assuming poor market conditions to support a 90% confidence level of success.

These simulations take into account the volatility that a typical target date asset allocation might experience under different market conditions. Volatility of the stocks, bonds and short-term asset classes is based on the historical annual data from 1926 through the most recent year-end data available from Ibbotson Associates, Inc. Stocks (domestic and foreign) are represented by Ibbotson Associates SBBI S&P 500 Total Return Index, bonds are represented by Ibbotson Associates SBBI U.S. Intermediate Term Government Bonds Total Return Index, and short term are represented by Ibbotson Associates SBBI 30-day U.S. Treasury Bills Total Return Index, respectively. It is not possible to invest directly in an index. All indices include reinvestment of dividends and interest income. All calculations are purely hypothetical and a suggested salary multiplier is not a guarantee of future results; it does not reflect the return of any particular investment or take into consideration the composition of a participant’s particular account. The salary multiplier is intended only to be one source of information that may help you assess your retirement income needs. Remember, past performance is no guarantee of future results. Performance returns for actual investments will generally be reduced by fees or expenses not reflected in these hypothetical calculations. Returns also will generally be reduced by taxes.

 4. The 33x number is determined through monte carlo simulation analysis to determine the sustainable withdrawal rate which can be maintained with 90% confidence over longer than typical retirement horizons i.e. > 30 years. These simulations take into account the volatility that a typical asset allocation might experience under different market conditions. Volatility of the stocks, bonds and short-term asset classes is based on the historical annual data from 1926 through the most recent year-end data available from Ibbotson Associates, Inc. Stocks (domestic and foreign) are represented by Ibbotson Associates SBBI S&P 500 Total Return Index, bonds are represented by Ibbotson Associates SBBI U.S. Intermediate Term Government Bonds Total Return Index, and short term are represented by Ibbotson Associates SBBI 30-day U.S. Treasury Bills Total Return Index, respectively. It is not possible to invest directly in an index. All indices include reinvestment of dividends and interest income. All calculations are purely hypothetical and a suggested multiplier is not a guarantee of future results; it does not reflect the return of any particular investment or take into consideration the composition of a participant’s particular account. The multiplier is intended only to be one source of information that may help you assess your retirement income needs. Remember, past performance is no guarantee of future results. Performance returns for actual investments will generally be reduced by fees or expenses not reflected in these hypothetical calculations. Returns also will generally be reduced by taxes.

Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

You could lose money by investing in a money market fund. An investment in a money market fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Before investing, always read a money market fund’s prospectus for policies specific to that fund.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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