How Long to Keep Financial Documents

Financial paperwork – if you are like most people you have stacks of it sitting around – in spare file drawers, in stacks on various desks, in boxes in spare bedrooms or in the dreaded “junk drawer.”  How long do you need to keep those documents?  Do you still need that bank statement from 1978 from the account you closed 8 years ago? (The answer is no.)  While today’s list is not a comprehensive list, and not all suggestions will apply to all situations, hopefully these guidelines will get you started.

A couple of notes before we look at specific documents:

·         When you are ready to get rid of ANY financial document DO NOT just throw it away!  It needs to be destroyed.  My parents would burn all of their documents in their fireplace.  I use a cross-cut shredder.  Either method works and destroys the document completely.  A shredder that just cuts things into long strips can be put back together, so that is not sufficient.

·         If you like to store things electronically then get a good paper-feed scanner (not flat bed) that will convert a document to PDF.  This essentially makes the question of “how long do I keep things” irrelevant.  You will want to back this folder up on a regular basis (either using an online backup service or drive you don’t keep in the home).  You may also want to password protect the folder and not label it obviously (i.e. Financial Documents is probably not a good name to call it).

·         If you get electronic statements don’t count on the institution to maintain a copy of it.  You want to download a copy to your computer.

With those notes in mind, let’s jump to documents.

Keep Forever

There are some documents that you should keep forever.  They should be kept in a fire-proof box or safety deposit box.  These may include (but are not limited to):

·         Birth & Death Certificates

·         Adoption papers

·         Citizenship papers

·         Military records

·         Marriage & divorce papers

·         Immunization records

·         Wills, estate plans, living trusts, Power of Attorney, etc.

·         Child support agreements

·         Deeds

·         Titles

Three months

There are a number of documents you should keep a 3-month, running file of.  These include:

·         Bank statements

·         Mortgage statements

·         Credit card statements

·         Utility statements

On any of the above documents – if you are disputing an item be sure to keep that statement until it is completely resolved.

Other Guidelines

·         Paystubs: Keep the current year until the end of the year when you can match it to the year-end statement.  Keep the year-end statement for 3 years.

·         Property repair bills (i.e. for auto, home, boat, etc): Keep as long as you own the property, and pass on to the new owner when sold.

·         Warranty documents: You can get rid of these when you get rid of the item or when the warranty expires.

·         Insurance documents: Keep at least 5 years or until you get a new policy

·         Taxes:  A number of different sites recommend different ideas about how long to keep taxes.  The general rule is to keep them for seven years, as well as all supporting documentation.  Other sites recommend keeping tax returns forever.  IRS Publication 552 (available from www.irs.ustreas.gov) discusses how long to keep them.

·         Financial documents (mutual fund, IRA statements, retirement plan statements, etc): You don’t need to keep privacy notices, address confirmations and the like.  You need to keep proof of ownership for as long as you own it.  Keep statements until the end of the year when you get the year-end statement and can reconcile it.

·         Non-deductible IRA contributions: You may need proof that you made a non-deductible contribution when you withdraw the money at retirement, so hold on to it at least until then.  You will want to hang on to it as long as you hold on to your tax return for that year as well.

Do you have additional suggestions for how long to keep documents or how to be organized with your financial documents?  Please join us on our blog (http://mufinancialtip.blogspot.com) and add your comments.  Just click Comments at the bottom of the article.  We look forward to hearing from you!