Which documents should you keep and for how long?

Published: Thursday, November 08, 2018 @ 12:32 PM

Nobody wants to be buried in a pile of paperwork. But sometimes, you think a document is important in your life — or will be at some point in the future — and so you hold on to indefinitely.

Turns out that may not be necessary!

RELATED: What to delete when your phone runs out of storage space

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How long should you keep certain records?

The thing is, you never know when you may need a document of some kind in an emergency situation. And unfortunately, not all emergency situations are created equal.

With some situations like extreme weather, you’ll usually have advance notice of a coming storm. That’s why during hurricane season, our article on 29 items to pack in your financial emergency kit and bug-out bag is a popular link.

Yet what do you do if the unthinkable happens and there’s a coordinated financial cyber attack on our nation’s banking industry? There’s no way to get advance notice of that.

You could just wake up one morning and poof! Your money may be gone.

This is far from paranoid speculation; the Wall Street Journal notes the U.S. Treasury Department, among others, has recently issued a steady stream of warnings about a potential major cyber attack that could wipe out your financial records.

Money expert Clark Howard recommends four key steps you should take before this happens.

Chief among them being to turn off electronic statements and switch to paper. That way you always have an updated accounting of your money in the event that bank records are wiped clean by hackers.

Moreover, Clark also says you should take these additional steps right now to protect yourself.

Now let’s get down to the nitty-gritty of exactly what paperwork you need to keep…

The amount of records and paperwork you should keep is actually more limited than you might think.

Remember, physical copies of documents are great, but storing them in the cloud is acceptable, too. Google Drive, Dropbox or similar services are great for this purpose.

In addition, many people recommend following the 3-2-1 rule when it comes to recordkeeping and paperwork, according to this Reddit thread.

Simply put, this method starts with you having three independent copies of your data. Two should be stored on different types of media — such as in the cloud and on a thumb drive. And finally, one backup copy should be kept offsite, preferably in a safe deposit box.

So without further ado, here’s what to keep and what to toss!

Keep these documents forever

  • Tax returns
  • Contracts
  • Real estate records
  • Identification cards such as your passport, driver’s license, Social Security card, etc.
  • Any kind of loan payoff statements showing a zero balance.
  • Diplomas, education credentials or certifications
  • A list of previous addresses and landlord contact info (for renters).
  • Contact info for people who can verify you lived at previous addresses (important for government background checks and security clearances).

Keep these documents for up to 7 years

  • Tax return documentation – The IRS suggests keeping W-2s, 1099s and related documents for anywhere from three to seven years. Though depending on your individual tax situation, holding them longer may be advisable.
  • Insurance policies that are current or past ones that you may still want to make a claim on.
  • Home improvement records – Keep for anywhere from six years to forever; they can lower your capital gains tax when you go to sell.
  • Cancelled checks
  • Apartment leases after you move out.
  • Warranties, receipts and serial numbers for valuable items that you may make an insurance claim on.

Keep these documents either for a month, a quarter or a year

  • Bank deposit slips – Keep until you reconcile your statements.
  • Bank statements – Keep for the entirety of the calendar year; store with tax returns if they will be used to prove deductions, as in the case of charitable cash donations.
  • Investment records – Shred monthly and quarterly statements as new ones arrive; hold on to annual statements until you sell the investments.
  • Last pay stub of the year – Keep until you reconcile it with your W-2.
  • Medical and/or dependent care receipts as qualified expenses if you have an HSA or FSA.

Use your discretion on how long to keep these

  • All mortgage payment checks (statements) – Keep until mortgage is paid off. Disputes about balances have been known to arise when ownership of the mortgage note changes hands.
  • Car loan payment stub – Keep until the car is paid off.
  • Medical records, including bloodwork, a list of vaccinations and more.
  • Job offer letters and/or employment contracts to verify what terms of employment you agreed to should a dispute arise.

Toss these records

  • Credit card statements that are more than three years old.
  • Past insurance statements
  • Old utility bills, except the most recent one from your old address if you’ve moved.
  • Statements of recently paid bills, once you have something saying they’ve been paid.

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