Which Financial Paperwork to Keep and Which to Toss?
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These are general guidelines for retention of important personal and financial documents. Keep in mind that they are guidelines and may vary depending on your personal situation. In some situations longer retention may be required. Please consult with your Thrivent Financial representative and as appropriate your attorney and/or tax professional for additional information.
Only four in 10 people can find a financial document they need at a moment's notice, according to a 2010 Consumer Reports poll, which means six of us waste a lot of time sifting through piles. Storing documents electronically grows more and more popular as scanners are so accessible, but as the poll suggests, most people don't know where to retrieve the data.
Getting organized offers its own rewards, but maybe you simply don't know what you should keep and what you can toss. So, how long should you keep this stuff? Read on. And remember to shred documents you're discarding that contain confidential information.
- Toss paid bills at your discretion (some people get a kick out of comparing old heating bills with their current one). But keep receipts for big purchases (computers, furniture, jewelry and whatnot) indefinitely for warranty and insurance purposes.
- If you make charitable donations via credit card, keep those statements to support the income tax deduction. Electronic statement delivery makes it easy to save them.
- Keep paycheck stubs until you receive your annual W-2.
- Purge bank statements every few years if you actually get paper copies from your bank. Most banks offer them online and you can find them there if you need them.
- Pitch monthly/quarterly investment and retirement plan statements annually, but keep year-end statements and other records as long as you own the securities. Better yet, sign up for electronic statements if they are offered.
- With insurance policies that you renew each year, such as home, apartment and automobile, keep the most current contracts and dispose of older ones.
- Keep non-deductible IRA records to prove you already paid income taxes on the contributions.
- Save tax returns indefinitely and supporting documents for six years. The IRS has three years to audit you and six to challenge underreported income.1 But if the Social Security Administration says you didn't work 15 years ago, pulling out your tax returns is one way to prove you did.
Take Action Tip for Today
Store wills, trusts, powers of attorney, birth, marriage and death certificates, adoption and custody papers, life insurance contracts, car titles and property deeds in a safe-deposit box (not in that stack of magazines in your bathroom). It can take months to replace lost originals, and the resulting frustration will far outweigh the organizational effort. Electronic copies will work for quick reference but won't make them legally useful, in most cases.
More Resources
One reason for managing this paperwork efficiently is to minimize your risk for identity theft. Our most popular free financial education workshop is "Identity Theft," and it offers all sorts of practical tips for avoiding this growing crime. Find a workshop in your area.
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