Staying fiscally fit

Saving for retirement is all about endurance. In order to maintain a strong financial situation and stay on track in the years ahead, you’ll want to monitor your progress and know how to manage your debt.

Take your financial pulse

To begin, it’s important to review your retirement your plan regularly – every year or so works great. Keep in mind major life changes can also affect your plans. Getting married or expecting a child? Buying a house or changing jobs? Big changes like these should also trigger a big-picture assessment of your financial situation.

As part of these regular reviews, be sure to:

• Assess your progress on your short-term and long-term savings goals
• Track investment performance and adjust as needed
• Save more for retirement as your income increases
• Update insurance coverage to reflect changes in income or lifestyle

Another key way to measure your overall financial health is to calculate your net worth. Net worth is the total value of what you own, minus what you owe. Review your net worth every year. The goal is to have positive net worth that grows over time. A strong net worth will allow you to reach your financial goals.

Don’t be sidelined by debt

The key to maintaining financial health when you decide to borrow money is understanding the difference between “good debt” and “bad debt.”

Good debt includes things such as paying for a child’s education, more education or career training for you or your spouse, or buying a home. Good debt is something that can provide a financial payoff, or where the value of the purchase will outlast the debt.

Bad debt is when you borrow for things that don’t provide any lasting financial benefits or that won’t last as long as the loan. Avoid borrowing for things like clothing, furniture, dining out and vacations. After all, if you’re always paying for things that happened in the past, it will be much more difficult to save for the future.

How much debt is acceptable? A good rule of thumb is that your mortgage payment should be no more than 30% of your take-home pay. Total payments on the rest of your debt (including student loans, car loans, personal loans and credit card payments) should be less than 10% of your take-home pay.

Credit cards are one of the most common ways people do major damage to their financial health. When it comes to using credit cards, be a smart consumer. Shop for the best interest rates, annual fees, service fees and grace periods. And use the credit you do have conservatively: keep only one or two credit cards, pay your cards off every month, and don’t charge big-ticket items.

If you experience any of the following warning signs, you may need to seek help from a financial advisor or credit counselor:

• Borrowing to pay off other loans
• Borrowing to pay regular bills
• Always making minimum payments on credit cards
• Creditors are calling
• You’ve been turned down for credit

Looking for more ways to maintain good financial health? Visit the U.S. Department of Labor site. US Department of Labor Savings Fitness booklet

Recordkeeping and administrative services for the plan are provided by J.P. Morgan Retirement Plan Services.

This material is provided for informational and educational purposes only. It is not intended to provide personalized tax, lending, ERISA, legal or investment advise. A professional should be sought for all such matters. Nothing in the Education Section of the web site should be construed as a solicitation of an offer to buy or sell any security. While sources of information are believed to be reliable, JPMorgan Retirement Plan Services does not warrant or guarantee the information. Where assumptions have been made, they are hypothetical in nature and not representative any particular security. Past performance is not a guarantee of future results and investing in securities involves risk, including the possible loss of principal.