How Long to Keep Important Papers
Know Which Documents to Hold Forever and Which to Throw Away
A stack of papers can be intimidating. The key is to try to touch each paper one time. Pick it up, decide what to do with it and then do it. Use this guide to determine which papers should go in the recycling bin, which to the shredder, which to file and which ones need to be locked in a box.
Documents That Should Never be Thrown Away
Birth certificates, marriage licenses, death records and social security cards should be safely stored. Consider a fireproof box or a bank safety deposit box for these documents. Other documents that should be securely stored until they are outdated:
- wills
- deeds
- vehicle titles
- passports
- stocks, bonds, other investment paperwork
- divorce and custody paperwork
- military records
- diplomas
- medical history
- employment records
Another keeper is any non-deductible IRA contribution statements. These records provide proof that taxes have already been paid on this money. Other retirement related statements should be kept quarterly. Shred the quarterly statements after receiving, and reconciling, the end of the year summary.
Important Papers That Can be Discarded
Consider investing in a shredder to use when discarding sensitive papers. Any paper with information such as name, address, account numbers should be shredded.
- Keep pay stubs until tax statements (W2) are received. After reconciling and checking for errors, shred the stubs.
- Retain utility bills (gas, electric, phone, etc.) for three months. Shred for discard. If these statements are needed for tax purposes, file them in the proper tax folder.
- Keep records of vehicle repair and service visits for the time the vehicle is owned
- Save credit card receipts for one month and then reconcile against the monthly statement. Shred and discard the receipts if they match the statement. Credit card statements should be kept for one year. If the statement contains any tax information, file it in the appropriate tax folder.
- Save mortgage and loan documents until the loan is completely repaid.
- Staple receipts to the inside of the instruction manual for an easy way to identify price and purchase date of large ticket items. Keep warranty information in the instruction guide as well. A three ring notebook with clear plastic sleeves is a helpful way to store manuals. Go through the notebook at least once a year and throw out any manuals of items no longer owned.
- Keep bank records and statements for one year. Shred monthly statements when annual statements have been received and reconciled. Keep annual records permanently.
- Canceled checks should be kept for three years, then shred.
- Maintain a tax folder for the year filled with receipts for deductible purchases, income statements and tax payments. Keep tax folders for seven years.
For those who need a more formal system, check out Freedom Filer. This color-coded labeling system is designed to help the paper-challenged organize the chaos.
Don't be afraid of that burgeoning pile of papers. Throw out what is no longer needed and organize a filing system for the rest. Aim to do the "purge or file" process each month. Filing and finding necessary documents will soon be a snap.
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