{"id":11390,"date":"2025-02-27T02:00:00","date_gmt":"2025-02-27T08:00:00","guid":{"rendered":"https:\/\/www.discover.com\/online-banking\/banking-topics\/?p=11390"},"modified":"2026-01-31T16:18:21","modified_gmt":"2026-01-31T22:18:21","slug":"retirement-quiz","status":"publish","type":"post","link":"https:\/\/www.discover.com\/online-banking\/banking-topics\/retirement-quiz\/","title":{"rendered":"Retirement quiz: Test your retirement knowledge"},"content":{"rendered":"\n<p>One day you\u2019ll likely want to close the book on your career and start a new chapter of your life, but do you know how to plan for retirement?<\/p>\n\n\n\n<p>The majority of working Americans say they are behind on their retirement savings goals, <a href=\"https:\/\/www.bankrate.com\/retirement\/retirement-savings-survey\/#:~:text=Bankrate%27s%20key%20retirement%20insights,-The%20percentage%20of&amp;text=56%25%20of%20American%20workers%20feel,21%25%20feel%20right%20on%20track.\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">according to a Bankrate survey<\/a>. If you don\u2019t know how to plan for retirement, you could find yourself in the same position.<\/p>\n\n\n\n<p>A financially secure retirement might feel like a lofty goal, but it\u2019s totally within reach if you educate yourself on a few fundamental retirement savings concepts.<\/p>\n\n\n\n<p>It\u2019s time to take the first step toward confident retirement planning. Ryan Inman, a financial planner, and Andy Wang, managing partner at an investment management firm, are here to help. Below, they share the concepts that you need to master if you\u2019re wondering how to learn about retirement planning.<\/p>\n\n\n\n<p>But first: Test your knowledge with our retirement quiz. When you\u2019re done, the experts\u2019 guidance on how to plan for retirement can help you fill in any gaps to ace the quiz\u2014and your retirement.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-retirement-quiz-what-do-you-know-about-retirement\"><strong>Retirement quiz: What do you know about retirement?<\/strong><\/h2>\n\n\n<div class=\"wp-block-mcd-interactives wp-block-mcd-interactives--retirement-quiz\">  <iframe class=\"wp-block-mcd-interactives__iframe\" src=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/plugins\/mcd-interactives\/\/src\/interactives\/retirement-quiz\/retirement-quiz.html\" title=\"retirement quiz\" id=\"iframe-retirement-quiz\"><\/iframe><script>iFrameResize({ log: false }, \"#iframe-retirement-quiz\")<\/script><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h-harnessing-the-power-of-compound-interest\">Harnessing the power of compound interest<\/h2>\n\n\n\n<p><a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/compounding-your-savings-for-retirement\/\" target=\"_blank\" rel=\"noreferrer noopener\">Compound interest<\/a> has been called the eighth wonder of the world. Its surprising ability to grow wealth can feel like a miracle, but it\u2019s actually just good old-fashioned math.<\/p>\n\n\n\n<p>\u201cCompounding is the key to most great investors\u2019 success,\u201d Wang says. That\u2019s because as you earn interest on your money, your money grows. He points out that over time, you earn interest not just on your initial deposit but also on the interest that accumulates.<\/p>\n\n\n\n<p>This same principle applies to stock investing where constant reinvestment of capital gains produces a compounding effect so you earn gains on your gains, he adds.<\/p>\n\n\n\n<p>Because the interest you earn is based on an ever-growing amount of money, your rate of wealth accumulation accelerates as the years go by.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-compound-interest-works-an-example\">How compound interest works: An example<\/h3>\n\n\n\n<p>An example can help when you\u2019re learning about retirement planning, especially when math is involved.<\/p>\n\n\n\n<p>Let\u2019s say you put $10,000 into a diversified 60\/40 mix of equities and fixed income that has an average annual return of 6% within your IRA. This is how compound interest would fuel your money\u2019s growth over the years:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Year 1:<\/strong> You would make 6% on the $10,000, which is $600.<\/li>\n\n\n\n<li><strong>Year 2: <\/strong>You would make 6% on your money again, but this time it would be on a balance of $10,600. As a result, you\u2019d add $636 to your account.<\/li>\n\n\n\n<li><strong>Year 3: <\/strong>You would make 6% on $11,236, or $674.16.<\/li>\n\n\n\n<li><strong>Year 10:<\/strong> You would have $17,908.48 in your account thanks to the power of compounding.<\/li>\n<\/ul>\n\n\n\n<p>You can play with the numbers in a <a href=\"https:\/\/www.investor.gov\/financial-tools-calculators\/calculators\/compound-interest-calculator\" target=\"_blank\" rel=\"noreferrer noopener\">compound interest calculator<\/a> to see the phenomenon yourself.<\/p>\n\n\n\n<p>Compound interest is fundamental to how you plan for retirement because it yields bigger results over longer periods of time\u2014and saving for retirement is all about the long term.<\/p>\n\n\n\n<p>\u201cThe longer your money is invested, the more compound interest grows,\u201d Inman says.<\/p>\n\n\n\n<p>As a result, he says one of the biggest <a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/retirement-savings-mistakes\/\" target=\"_blank\" rel=\"noreferrer noopener\">retirement savings mistakes<\/a> you can make is to put off saving for retirement\u2014because it prevents you from harnessing the impressive power of compound interest.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-understanding-your-tax-advantaged-retirement-options\">Understanding your tax-advantaged retirement options<\/h2>\n\n\n\n<p>When saving for retirement, Inman and Wang recommend that you make use of any available tax-advantaged accounts (in other words, accounts that save you money on taxes).<\/p>\n\n\n\n<p>Some savers have access to a 401(k) or other employer-sponsored retirement accounts through their jobs. Every American who has earned income can contribute to an individual retirement account, or IRA.<\/p>\n\n\n\n<p>Let\u2019s take a closer look at each of these tax-advantaged retirement options to help you understand how to plan for retirement.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"2120\" height=\"869\" src=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2021\/09\/Retirement-Quiz-Do-You-Know-How-to-Plan-for-Retiremen-INARTICLE-2-Edit-e1630503279383.jpg\" alt=\"Take this retirement quiz for tips and guidance how to plan for retirement.\" class=\"wp-image-11640\" srcset=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2021\/09\/Retirement-Quiz-Do-You-Know-How-to-Plan-for-Retiremen-INARTICLE-2-Edit-e1630503279383.jpg 2120w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2021\/09\/Retirement-Quiz-Do-You-Know-How-to-Plan-for-Retiremen-INARTICLE-2-Edit-e1630503279383-300x123.jpg 300w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2021\/09\/Retirement-Quiz-Do-You-Know-How-to-Plan-for-Retiremen-INARTICLE-2-Edit-e1630503279383-780x320.jpg 780w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2021\/09\/Retirement-Quiz-Do-You-Know-How-to-Plan-for-Retiremen-INARTICLE-2-Edit-e1630503279383-768x315.jpg 768w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2021\/09\/Retirement-Quiz-Do-You-Know-How-to-Plan-for-Retiremen-INARTICLE-2-Edit-e1630503279383-1536x630.jpg 1536w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2021\/09\/Retirement-Quiz-Do-You-Know-How-to-Plan-for-Retiremen-INARTICLE-2-Edit-e1630503279383-2048x839.jpg 2048w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2021\/09\/Retirement-Quiz-Do-You-Know-How-to-Plan-for-Retiremen-INARTICLE-2-Edit-e1630503279383-730x299.jpg 730w\" sizes=\"auto, (max-width: 2120px) 100vw, 2120px\" \/><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-the-401-k-retirement-plan\">The 401(k) retirement plan<\/h3>\n\n\n\n<p>The most common employer-sponsored plan is the 401(k), which allows employees to put a certain amount of each paycheck toward retirement. \u201cThe 401(k) is one of the best options you have to save for retirement,\u201d Wang says.<\/p>\n\n\n\n<p>One of the reasons it\u2019s such a great option, he says, is that contributing to a 401(k) can ease your tax bill each year.<\/p>\n\n\n\n<p>\u201cThe money you contribute doesn&#8217;t count toward your gross income for the year, and that lowers your taxable income as a result,\u201d he explains. \u201cFor example, let\u2019s say you make $25,000 per year and you contribute $2,000 into your 401(k). As far as the IRS is concerned, you made $23,000 and you\u2019ll be taxed on the $23,000.\u201d<\/p>\n\n\n\n<p>In addition to lowering your tax bill, your 401(k) is growing your retirement savings thanks to the power of compound interest.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-401-k-match\">401(k) match<\/h4>\n\n\n\n<p>Sometimes, employers will also offer what\u2019s known as a <em>401(k) match<\/em>, which means they\u2019ll match whatever you contribute to your retirement savings up to a certain amount.<\/p>\n\n\n\n<p>For example, Inman says that if your employer offers a 3% match and you\u2019re contributing at least 3% of your salary to your 401(k), then your employer will contribute an additional amount equal to 3% of your salary.<\/p>\n\n\n\n<p>If your employer offers a 401(k) match and you\u2019re not enrolled, \u201cYou\u2019re not only missing out on the tax benefits of a 401(k), but you\u2019re leaving free money on the table,\u201d Inman says.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-vesting-periods\">Vesting periods<\/h4>\n\n\n\n<p>How to learn about retirement planning means understanding your <em>vesting period<\/em>. Inman notes that some companies have vesting periods, which means you won\u2019t receive the full 401(k) match until you satisfy a particular length of employment.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-maximum-contributions\">Maximum contributions<\/h4>\n\n\n\n<p>The <em>maximum contribution<\/em> is the total amount you\u2019re allowed to contribute to your 401(k) each year. This limit can change year to year according to the latest tax laws. In the 2025 tax year, for example, you can contribute a maximum of $23,500 to your 401(k) account, <a href=\"https:\/\/www.irs.gov\/newsroom\/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000#:~:text=Highlights%20of%20changes%20for%202025,to%20an%20IRA%20remains%20%247%2C000\" target=\"_blank\" rel=\"noreferrer noopener\">the IRS says<\/a>. If you\u2019re over 50, you can take advantage of catch-up contributions\u2014up to an additional $7,500 per year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-the-individual-retirement-account-ira\">The individual retirement account (IRA)<\/h3>\n\n\n\n<p>Another popular retirement account is the IRA. According to Inman, there are two main types of IRAs, each with a different tax advantage.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-traditional-ira\">Traditional IRA<\/h4>\n\n\n\n<p>Generally speaking, Inman says, a Traditional IRA allows you to deduct your contributions from your taxes now, but you\u2019ll need to pay taxes on the money you withdraw in retirement. You can withdraw your contributions and earnings without IRS penalty at age 59\u00bd.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-roth-ira\">Roth IRA<\/h4>\n\n\n\n<p>The other type of IRA is the Roth IRA. Inman notes that contributions to a Roth IRA can\u2019t be deducted from your taxes now, but when you withdraw your earnings in retirement (at age 59\u00bd or later, to avoid a penalty), you do so tax-free. Because you pay taxes on your contributions, you can withdraw those from your Roth IRA anytime.<\/p>\n\n\n\n<p>\u201cSome earners\u2019 income is too high to qualify for a Roth IRA,\u201d Inman says. (In 2025, the income limit is $165,000 for individuals and $246,000 for married couples filing jointly, according to <a href=\"https:\/\/www.irs.gov\/newsroom\/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000#:~:text=Highlights%20of%20changes%20for%202025,to%20an%20IRA%20remains%20%247%2C000\" target=\"_blank\" rel=\"noreferrer noopener\">the IRS<\/a>.)<\/p>\n\n\n\n<p>Unsure of which type of IRA to choose? Dive into all the differences between a Roth IRA and a Traditional IRA. Check the <a href=\"https:\/\/www.irs.gov\/newsroom\/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000#:~:text=Highlights%20of%20changes%20for%202024,to%20%247%2C000%2C%20up%20from%20%246%2C500.\" target=\"_blank\" rel=\"noreferrer noopener\">latest IRS guidance on income and contribution limits<\/a> before selecting the best option for you.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-automating-your-retirement-savings\">Automating your retirement savings<\/h2>\n\n\n\n<p>If you find yourself <em>thinking<\/em> about how to plan for retirement but not actually <em>doing<\/em> the regular saving that you need to, then automating your retirement savings might be for you.<\/p>\n\n\n\n<p>Inman and Wang note that most 401(k) plans have automation features: Once you opt in and configure your preferences, your plan will deduct a certain dollar amount or percentage out of every paycheck and invest it in the funds you pre-selected.<\/p>\n\n\n\n<p>There are even mobile apps that have emerged to make it easier for people to automate their retirement savings than ever before. They allow savers to set up automatic deposits from their checking or savings accounts into a retirement savings fund according to their risk tolerance and goals.<\/p>\n\n\n\n<p>\u201cTechnology\u2019s come a long way in helping us automate our retirement savings,\u201d Inman says.<\/p>\n\n\n\n<p>When considering how to plan for retirement, automating your retirement savings has two key benefits:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-automation-removes-emotion-from-investing\">1. Automation removes emotion from investing<\/h3>\n\n\n\n<p>The fact is, it\u2019s not always a pleasant experience to move money from your checking account into your retirement savings. Wang notes that when you\u2019re automating your savings, \u201cyou won\u2019t even miss that money, but it can grow to a significant amount over time.\u201d<\/p>\n\n\n\n<p>Because of this out-of-sight-out-of-mind phenomenon, Inman suggests increasing your 401(k) contribution amounts whenever you get a raise at work.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-automation-helps-you-take-advantage-of-dollar-cost-averaging\">2. Automation helps you take advantage of dollar-cost averaging<\/h3>\n\n\n\n<p>You might have noticed that the stock market can be up one day and down the next. These unpredictable swings pose the risk that you could \u201cbuy high\u201d right before the prices swing lower.<\/p>\n\n\n\n<p>Inman points out that when you\u2019re automating your savings, you\u2019re investing the same amount of money at regular intervals. So if the market is up, your retirement savings go up, but you\u2019re buying at higher prices. If the market goes down, your savings go down, but you\u2019re also buying at lower prices.<\/p>\n\n\n\n<p>Over time, your costs average out, and this is what is known as <em>dollar-cost averaging<\/em>. \u201cAutomation is allowing us to dollar-cost average without us even knowing that we\u2019re doing it,\u201d Inman says.<\/p>\n\n\n\n<\/div>\n\n\n<div class=\"mx-auto block-quote block-quote--100back bg-fixed bg-center bg-no-repeat bg-cover z-0\">\n    <div class=\"block-quote__glow\"><\/div>\n    <blockquote class=\"post--constrain-large\">\n        <p>&#8220;Conventional wisdom says that you should expect to need 70% to 90% of your annual pre-retirement income in retirement.&#8221;<\/p>\n                    <footer class=\"block-quote__source\">Andy Wang, managing partner at an investment management firm<\/footer>\n            <\/blockquote>\n<\/div>\n\n\n    <div class=\"post__content\">\n\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-estimating-how-much-money-you-ll-need-in-retirement\">Estimating how much money you\u2019ll need in retirement<\/h2>\n\n\n\n<p>You could use every savvy retirement strategy in the book, but how do you know how much you should save before you can retire?<\/p>\n\n\n\n<p>\u201cConventional wisdom says that you should expect to need 70% to 90% of your annual pre-retirement income in retirement,\u201d Wang says. For example, he says that a person who earns an average of $100,000 per year before retirement should expect to need $70,000 to $90,000 per year in retirement.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-the-4-rule\">The 4% rule<\/h3>\n\n\n\n<p>Another frequently used rule of thumb when learning about retirement planning is known as the 4% rule, Wang says. The idea is that if you can withdraw no more than 4% each year from your savings in retirement (adjusting for inflation and taxes along the way), then \u201cyou should have a very high probability of not outliving your money during a 30-year retirement,\u201d he says.<\/p>\n\n\n\n<p>If our eventual retiree will need to withdraw $80,000 a year, that annual pre-tax income needs to represent no more than 4% of their retirement savings. Because 4% is the same as 1\/25, they would need to multiply $80,000 by 25 to arrive at a target retirement savings goal of $2,000,000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-put-your-knowledge-to-work-toward-your-retirement\">Put your knowledge to work toward your retirement<\/h2>\n\n\n\n<p id=\"h-by-taking-this-retirement-quiz-and-studying-new-retirement-concepts-you-ve-taken-the-first-steps-toward-how-to-learn-about-retirement-planning\">By taking this retirement quiz and studying new retirement concepts, you\u2019ve taken the first steps toward how to learn about retirement planning.<\/p>\n\n\n\n<p>Now, it\u2019s time to make the moves that your future self will thank you for. See how Discover can empower you to confidently follow your retirement plan.<\/p>\n\n\n\n<p class=\"disclaimer\">Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.<\/p>\n\n\n\n<p class=\"disclaimer\">*The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. Please consult your tax advisor with respect to information contained in this article and how it relates to you.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you\u2019re wondering how to learn about retirement planning, test your knowledge with this retirement quiz and learn key concepts from retirement experts.*<\/p>\n","protected":false},"author":15,"featured_media":11638,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7,89],"tags":[114,135,117,35,55,30,122,118,121,110,27,116,101],"class_list":["post-11390","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-retirement","category-saving-for-retirement","tag-401k","tag-automatic-transfer","tag-compound-interest","tag-financial-education","tag-financial-goals","tag-ira","tag-preparing-to-retire","tag-retirement-basics","tag-retirement-income","tag-retirement-planning","tag-saving-for-retirement","tag-tax-advantages","tag-tools-calculators"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/11390","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/comments?post=11390"}],"version-history":[{"count":30,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/11390\/revisions"}],"predecessor-version":[{"id":22461,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/11390\/revisions\/22461"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/media\/11638"}],"wp:attachment":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/media?parent=11390"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/categories?post=11390"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/tags?post=11390"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}