Updated June 23, 2021.
And what should be shredded.
Some papers can be touched once, and then tossed in the garbage like a hamburger wrapper.
Yet we all have some valuable identification records, financial statements, contracts or receipts that we ought to file and store in a safe place for easy retrieval later on.
If you've ever been the victim of identity theft, fire, or flood, or had to settle the estate of a loved one, you know how important it is to organize and store critical records. Here's a quick guide to help you to evaluate what records you should keep — and for how long:
Forever and ever
Starting backwards, here are some records you should keep forever:
- Birth, marriage, and death certificates.
- Adoption records.
- Divorce papers.
- Wills, living wills, and powers of attorney.
- Social Security cards.
- Property deeds and mortgage documents.
- Pension plan documents.
- ID cards and passports.
- Copy of 1040 tax returns.
- Life insurance policies.
- Vehicle titles and loan documents.
- Other legal papers.
- College transcripts.
- Accident reports, insurance claims.
- Inventory of safe deposit box contents.
Until sold or updated
These records should be kept until the property or item is sold or the account updated:
- Loan documents.
- Appraisals for jewelry, art, or other valuables.
- Warranty documents and receipts.
- Video of home contents in case of insurance claim.
- Year-end account statements to show the cost basis for investments on your taxes.
- Savings bonds and investment statements.
- Vehicle records.
- Medical bills until claims paid by insurance company; longer if you need medical expense deduction on your tax return.
Take 20 minutes each week to file your paperwork and avoid accumulating a backlog of papers and a cluttered desk.
Keep state and federal tax records and receipts for seven years, saving a copy of your 1040 tax return forever.
Keep documents showing home sale, purchase, or expenses for improvements for six years after you sell your home.
Retain those thank-you letters from charities, and also year-end investment statements, in the event you are audited by the IRS.
One year or less
Most of these records can be shredded after one year:
- Pay stubs and bank statements.
- Annually updated Social Security statements.
- Annual insurance policy statements.
- Annual retirement plan statements (401(k), 529, IRA, etc.).
- Bank deposit and ATM receipts until reconciled with your monthly statements.
- Credit card bills and statements. Longer if needed as proof of a charitable contribution or product warranty.
- Utility bills.
For your security, shred expired credit cards, visas, passports, and other identification.
Consider keeping at least two storage locations for your records:
- One for active files of less than three years to access quickly. This could be a home firebox or secure file cabinet located in a dry and safe spot.
- One for permanent hard copies that back up your home files. A credit union or bank vault is recommended. (Note: In some states, safe deposit boxes are closed at time of death, so keep a copy of your will in your home files or with a trusted relative or friend.)
Many people use a third location to store important records — an external hard drive that's password protected. Scanning and storing documents electronically is a great way to put lots of records into a tiny space, particularly if you regularly update the system.
Develop a habit of regularly filing your paperwork — say, 20 minutes each week — to avoid accumulating a backlog of papers and cluttered desk. You'll feel better knowing that critical records are available to you at a moment's notice!