Spring cleaning for your financial files
Some of us save too little. Others, too much. For those whose personal file cabinets overflow with financial documents, tax time can become a time for spring cleaning — and shredding.
There’s no benefit to keeping any financial document longer than needed. A recent article in the New York Times recommends keeping the following types of documents for varying lengths of time.
- Legal and bankruptcy filings (indefinitely)
- Wills (indefinitely)
- Inheritance documentation (indefinitely)
- Documentation of contributions to and withdrawals from retirement accounts (indefinitely)
- Tax returns and copies of checks written to the government (at least 7 years; some say keep indefinitely)
- Records proving any income, deductions or credit claimed to the IRS (3-7 years)
- Loan documents (keep until loan is paid in full; after that, keep just proof of loan payoff)
- Insurance policies (keep as long as the policies are in effect)
- Insurance claim paperwork (keep invoices, receipts and explanations of benefits until the claim is resolved to your satisfaction; 6-7 years for tax-deductible medical expenses)
- Bank statements (1 year)
- Credit card statements (2 months)
- Bills for utilities, cell phone, etc. (1 month or until the payment has been processed; longer if self-employed and used as tax deductions)
Experts recommend keeping paper copies of these documents in a locked filing cabinet or a safe deposit box. Documents kept in electronic form should be stored on an encrypted USB drive or encrypted external hard drive. Keeping personal financial documents in an email program, a computer hard drive or an online storage site is not considered safe.
For more information:
What to keep in a safe deposit box
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