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Save or Shred: How Long Should you Keep Financial Records

Save or Shred: How Long Should you Keep Financial Records

| June 07, 2019
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Even in the digital age, much of our financial life is on paper, which makes many people hesitant to discard those records because they fear that they'll need them someday. There is a lot that can be done to reduce the amount of paper that comes your way in the first place. We’ll offer up some tips and a guide on how long you should keep financial records before shredding. 

  1. Reduce the amount of paper that is mailed to you.

    From the Federal Trade Commission Consumer Information website:
  • Opting-out of prescreened offers of credit and insurance
  • Joining the National Do Not Call Registry to reduce telemarketing calls
  • Direct Marketing Association Choice offers consumers a simple, step-by-step process that enables you to decide what mail you want to receive.

    Sign up for electronic delivery of financial records whenever possible.  Having your records sent to you electronically may save you money in some cases and you won’t have to spend time opening the mail, filing the records and having them shredded later. Set up an electronic filing system to keep your records organized for future reference. Consider going paperless on:

  • Bills for utilities, credit cards, or service accounts
  • Bank statements
  • Investment account statements
  • Mortgage statements
  • Car payments
  • Paycheck stubs

    2. Determine what is safe to recycle and what needs to be shredded

    Most junk mail can be recycled however bills, financial documents and credit card offers are just the sorts of things that scammers and identity thieves want to get their hands on. Stop and think about whether it is safe to put your paper clutter in a recycle bin, if not set aside for shredding.  Old computers and phones should be cleared of all data before being sent off for recycle.

    3. Know how long to keep various financial records before shredding

    Tax Documents: In general, seven years is a safe time frame for federal tax obligations. Included in tax documents would be tax returns and all evidence for items you claimed as deductions.

    Property Records: If you’re a homeowner, keep documents related to the purchase of your home and any improvements you have made for at least six years after you sell the home. If you are a renter, it’s okay to shred rental agreements after you’ve moved and your security deposit has been settled.

    Mortgages and Other Loans: Keep all loan documents until you have paid off the loan, however, keep proof that you paid off your loan indefinitely.

    Paycheck stubs: If you don’t get direct deposit, save your paycheck stubs until you receive your W-2 form and verify that the stubs match the amount shown on the W-2.

    Bills: It’s okay to shred most bills as soon as your payment clears. However, for any big- ticket items - furniture, jewelry, computers or other expensive electronics, etc.—keep the bill as long as you have the item. You might need to substantiate an insurance claim in the event of loss or damage.

    Credit Card Receipts and Statements: When your monthly statement comes in, you should check it against any physical receipts or bank records that record your purchases. If you used your credit card to buy something you plan to claim as a tax deduction, put the receipts and statements in the seven-year safekeeping folder with other tax-related items. Otherwise, they are ready to shred.

    Brokerage Statements: Hold on to brokerage statements until you’ve got the annual summary in hand to make sure they match up. It’s also wise to keep records of purchases and sales of securities in case you need to prove capital gains and losses at tax time. And if it’s been claimed on your taxes, keep it for seven years, just in case.

    After filing your taxes each year is a good time to comb through your records and set aside any items that are due to be shredded. We offer our clients an opportunity to bring in documents for shredding each summer when we have a shredding truck on site and provide lunch in the park. Check our upcoming events page for the date each year. We hope to see you there.

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