Do I Need to Keep This?

The latest Netflix hit has gotten a ton of press lately, probably because most of us have way more “stuff” than we need. In Tidying Up, Maria Kondo helps people get rid of the things they don’t need, often by asking if the item itself “brings them joy.” Some find it enlightening and helpful, while others find it sort of ridiculous and unrealistic.

But it did get us thinking about the things we tend to keep, in particular the overwhelming amount of paper we often shove in a desk drawer and never see again.

Unless it meant an epic refund, it is unlikely that your old tax returns “bring you joy.” But since the IRS can go back as far as six years to conduct an audit, you need to keep your tax records from the last seven years just to be safe. But any more than that is simply clutter, so each year when you file your return, bring yourself some joy by shredding your return from seven years ago!

Outside of that, much of what we keep is simply not necessary. Here’s a handy guide on what – and when – you can get rid of safely.

Keep briefly

  • ATM, bank deposit and credit card receipts only need to stay around until you reconcile them with your monthly statement. Once that is done, shred them.
  • Insurance policy (except life) and investment statements are only needed until the new version arrives, so you can safely shred that thick folder of old statements now.
  • Pay stubs should be kept for a year, but you can eliminate them once you reconcile them with your W-2.

Keep for a year or more

  • Loan documents should be kept until the loan is paid off. But you can replace each monthly statement with the new one when it arrives.
  • Keep car titles for as long as you own the vehicle.
  • Stock, bond and mutual fund purchase confirmations should be kept until you sell the investment. This allows you to easily establish your cost basis and holding period.

Keep forever

  • Essential records like birth and death certificates, marriage licenses and divorce decrees, Social Security cards and military discharge papers need to be kept in a safe place indefinitely.
  • Other documents to keep include those for defined-benefit plans, estate planning, advance directives and life insurance. You should also share these with your attorney or executor, and let your loved ones know where they are kept.

One more thing…when you get rid of something, you can safely eliminate any paperwork that went along with it. This would include things like appliance warranties, vehicle reports and loan documents.

To avoid the potential for identity theft, always shred documents rather than recycling or tossing them in the trash. If you have questions about a specific item, feel free to reach out to us. Now who’s having a shredding party?