This isn’t a post that deals with paper “clutter” (magazines, sentimental greeting cards, recipes, notes, etc.) That’s a whole ‘nuther story…We’ll post that some other time.  This is about record-keeping: what records to keep and how long to keep ‘em. So, if you haven’t yet become completely paperless, read on.

One of the first things I do at the beginning of each year (OK, sometimes in March…OK, OK, every other year), I thin out the file folders contained in my two desk drawers.

First, you need a safe deposit box at the bank or a fireproof safe for important documents that need to be kept. You also need a convenient spot for your active (or current) files. Finally, you should have dead storage for your inactive files, somewhere else.

The following is just a guideline. I’m assuming that all financial papers that support your income tax returns have been kept with the tax return. Other than that, here we go!

What to Keep (pretty much) Forever:

Generally, I keep anything that’s a legal document, a government-issued document, or irreplaceable.

These documents should be kept in your safety deposit box or a fireproof and theft-proof safe:

• Birth and death certificates
• Marriage licenses
• Divorce decrees
• Passports
• Education records (Certifications, diplomas)
• Military service records
• Social Security Cards
• Life Insurance Policies (keep for the life of the policy plus 3 years)
• Adoption records
• Citizenship papers
• Current Wills & Trusts (outdated ones can be shred)
• Records of paid mortgages
• Immunization Records

What to Keep in Your “Dead” Files:

The following documents can be kept in your “dead” files

Note: I’m still trying to figure out what health records and 401K and IRA documents to keep, so I keep them all.  At the very least, hang on to your 401K and IRA annual statements, Forms 8606, Forms 5498, and your Forms 1099-R.

Keep Indefinitely:
▪ Home Improvement Records (You probably don’t need these, but I hold on to them in case there are changes to the capital gains tax law when you sell a house)

Keep for 7 Years:
▪ Records of paid-off loans
▪ Income Tax Returns and all associated documentation
▪ Records of Selling a House

Keep for 3 Years:
▪ Paid Medical Bills
▪ Expired Homeowner Insurance Policies

Keep for 1 Year:
• Paycheck Stubs (If you still receive paper stubs, you can get rid of these once you’ve compared your last stub of the year to your W2 & annual Social Security Statement)
• Paid utility bills
• Cancelled checks
• Bank statements
• Quarterly investment statements (Hold on to until you get your annual statement)

What to Keep in Your “Active” Files:

▪ Current year tax return’s supporting documents (contribution receipts, medical receipts, mileage logs, etc.). If you do this, your taxes will get done faster than beans through a cowboy.
▪ Contracts
▪ Insurance Policies
▪ Property Records
▪ Stock Records
▪ Records of Pensions and Retirement Plans

What You Can Toss/Shred Immediately:

▪ Receipts with the exception of those for major purchases under warranty or to prove value in the event of loss or damage
▪ Credit card statements after checking them for accuracy.
▪ ATM receipts, bank withdrawal and deposit slips and credit card receipts (after checking against your statement)
▪ Outdated Warranties and User Manuals (or toss them all and use Manuals Online)
▪ Expired/cancelled insurance policies with the exception of life insurance and homeowner’s policies
▪ Annual Reports and newsletters from investment companies

When a close family member passed away, the paperwork that was saved was astounding. Everything was kept! (every cancelled check, product wrappers, receipts dating back 60 years, 25-year-old greeting cards and even some documentation from previous generations), but it was very organized and storage wasn’t a problem. Poring over these old records was almost as enjoyable as looking at old photographs. So, if you have the room and want to keep everything, do it! Just remember, hiring a Mongolian Yak to haul it won’t be cheap.

Happy Shredding!