It’s the beginning of a new year and everyone is filled with good intentions. As you make resolutions about your personal relationships and your health, don’t forget about your finances. January is the perfect time to complete those money management tasks you’ve been pushing off for 12 months. One thing we recommend is spending some one-on-one time with your filing cabinet.
If you’re like most people, it’s not unlikely that your filing cabinet is bursting from the seams. The financial services industry generates a lot of paper and it’s easy to fall into a pattern where you simply file everything away upon receipt. Start 2016 off on the right foot by reviewing the documents in your filing cabinet and shredding the ones you don’t need to keep.
Many financial documents, including statements, bills, receipts, pay stubs and investment statements can be shredded when reconciled, or when new versions come to replace them. If you need them for warranties or tax purposes, you can scan receipts and statements to save digitally, or keep in a special file for those items.
We recommend you keep your tax returns for seven years before disposing of them. That’s because the IRS has three years to come back and audit you, and six years to actually complete an audit. Documents that you need to support your tax return should be kept with your tax return. You can keep hard copies of these items, or scan them to save them digitally.
The documents that you need to keep longest are those related to investments, loans, vehicle records, titles, original life insurance and annuity policy documents, estate planning documents and retirement plan documents. You should keep these for a long period of time – including hard copies, which should be kept in a safe place. You can scan them for backup, but the originals should be guarded carefully.
Here’s a quick overview of what to shred and what to keep.
Let’s look first at the documents you need to keep physical copies of forever. Consider storing these types of documents in a safe or a safety security box at your bank.
- Birth and death certificates
- Social security cards
- Retirement plan documents
- ID cards and passports
- Marriage license
- Wills, living wills and powers of attorney
- Vehicle titles and loan documents
- House deeds and mortgage documents
The next set of documents include items you should keep for a little while. If you don’t want to file them in a safe place these are documents you could also scan and store online.
- Tax records and receipts (keep for seven years)
- Pay stubs and bank statements (keep for one year)
- Home purchase, sale, or improvement documents (keep for at least six years after you sell/buy)
- Medical records and bills (keep at least one year after payment in case of disputes)
- Warranty documents and receipts (keep as long as you own them)
The next group of documents include items you only need to keep the most recent version of.
- Social security statements
- Annual insurance policy statements
- Retirement plan statements
- Utility and other household monthly bills
Once you’ve identified the document you need to keep, organize them in your filing cabinet and you’re all set.
All the other documents you’ve accumulated over the past year can be shredded or thrown away. But keep in mind – you should shred anything that has personal information on it, like your name, address, phone number, social security number or bank information.
If you need help determining what you should shred and what you should hang on to, don’t hesitate to reach out to a MidWestOne banker.