Test your savings IQ.

Compare your answers to insights from Schwab professionals.

Question: 1

Which should you do first?

Actually... While there are lots of ways to get loans for college, nobody’s going to lend you money for retirement. And if you’re not prepared to fund your later years, your kids may have to chip in. You might not be doing them any favors by sacrificing your retirement for their education. Read more about saving for retirement

Correct. By taking care of your own future first, you help ensure that your kids won’t be saddled with the responsibility of caring for you in later years. And while there are lots of ways to get loans for college, nobody’s going to lend you money for retirement. Read more about saving for retirement

Next Question

Question: 2

Which should you do first?

Correct. Setting money aside for unexpected expenses actually helps protect your retirement savings. If you have an unexpected expense, you won’t have to rob your plan—and pay a hefty expense for doing so. Build an emergency reserve before you contribute aggressively to a retirement plan. Read more about emergency savings

Actually... If you put all your savings into a retirement plan before you have an emergency reserve, an unexpected expense could force you to take money out of your plan—and pay a hefty penalty for doing so. Your good intentions to save for retirement first could actually end up costing you more. Read more about emergency savings

Next Question

Question: 3

Which should you do first?

Actually... While saving for retirement is very important, you’ll likely come out ahead by paying off credit cards first. Chances are, they’re costing you far more interest than any retirement account could pay—with one exception. If your employer offers to match your contributions to your retirement plan, get the match first before you start on the cards. Read more about company 401(k) matches

Correct. Start with the cards because they’re probably costing you way more interest than any retirement account can pay—with one exception. If your employer offers to match your contributions to your retirement plan, get the match first before you start on the cards. Read more about company 401(k) matches

Next Question

Question: 4

True or False?

In 2011, one out of three workers had to tap their retirement savings to pay basic expenses.

Correct. True. An unexpected expense could cost you dearly if you lack a reserve of emergency money and have to raid your retirement accounts. In 2011, 34% of workers had to withdraw money from their 401(k) or IRA just to cover basic living expenses. Read more about emergency savings

Actually... True. An unexpected expense could cost you dearly if you lack a reserve of emergency savings and have to raid your retirement accounts. In 2011, 34% of workers had to withdraw money from their 401(k) or IRA just to cover basic living expenses. Read more about emergency savings

Next Question

Question: 5

True or False?

You’ll have much better results if you wait for the best time to invest.

Correct. False. A Schwab study comparing ending wealth for investors who invested $2,000 a year for 20-year periods indicates that investing on the same day each year, regardless of market conditions, leads to far better outcomes than sitting on cash and is, on average, just 7% less effective than accomplishing the almost impossible: investing on the perfect day each year. Learn three important steps to smart investingSource: Schwab Center for Financial Research, 2011.

Actually... False. A Schwab study comparing ending wealth for investors who invested $2,000 a year for 20-year periods indicates that investing on the same day each year, regardless of market conditions, leads to far better outcomes than sitting on cash and is, on average, just 7% less effective than accomplishing the almost impossible: investing on the perfect day each year. Learn three important steps to smart investing Source: Schwab Center for Financial Research, 2011.

Next Question

Question: 6

True or False?

You can contribute a maximum of $24,000 to a 401(k) this year.

Correct. True—if you’re 50 or older. While the 2016 maximum 401(k) contribution is $18,000, when you reach age 50 you’re eligible to make an additional catch-up contribution of $6,000. Read more about saving for retirement

Actually... True—if you're 50 or older. While the 2016 maximum 401(k) contribution is $18,000, when you reach age 50 you’re eligible to make an additional catch-up contribution of $6,000. Read more about saving for retirement

Next Question

Question: 7

True or False?

People who calculate the cost of retirement are less confident about being able to retire.

Correct. False. Workers who have done a retirement needs calculation tend to be considerably more confident about their ability to reach their goal—even though their estimate of what they’ll need is generally higher. Just knowing where you stand can help. Read more about saving for retirementSource: Employee Benefit Research Institute 2011 Retirement Confidence Survey.

Actually... False. Workers who have done a retirement needs calculation tend to be considerably more confident about their ability to reach their goal—even though their estimate of what they’ll need is generally higher. Just knowing where you stand can help. Read more about saving for retirementSource: Employee Benefit Research Institute 2011 Retirement Confidence Survey.

With so many competing priorities, it’s hard to know the best way to save money. Schwab recommends eight savings fundamentals to help you prioritize.

Own your tomorrow®