Decluttering old paperwork can feel like a fresh start, but before you start tossing, it’s important to know which documents should be shredded, which can go straight in the trash, and which need to be kept for future reference. Some papers contain sensitive information that could put you at risk for identity theft, while others may be essential for taxes, loans, or legal purposes down the road.
This guide will help you determine what financial documents to keep, for how long, and when it’s safe to shred or discard them. A little organization now can save you a lot of trouble later.
What Documents Should You Shred?
One person’s trash is another person’s treasure—especially when that ‘treasure’ includes your personal information. Before tossing out financial documents, ask yourself: Should I keep this for my records, or is it safe to dispose of? If it’s no longer needed, don’t just throw it away—shred it first if it contains any of the following sensitive information:
- Credit card number (even just the last four digits)
- Account number and/or pin number
- Social Security number
- Your signature
- Phone number
- Name and address
- Account balances
What Documents Are Okay to Throw in the Trash?
Your bank, credit card company, lender, or other related institution will likely send you promotional materials from time to time. They may invite you to apply for a new credit card, alert you to an upcoming event, or tell you about the latest company news.
Any mail or document you receive that does not contain personal information (aside from perhaps your name and address on the envelope) can be thrown away as normal—no need to shred, even if it’s coming from a financial institution.
What Documents Should You Keep?
Decluttering feels great, especially when it comes to excess papers and files. But some documents need to stay put, at least for the time being. Here’s a look at which financial and personal records you should keep stored safely at home.
Short-Term (Less Than a Year)
Not every financial document has to stay in storage forever. Here are a few common items you may want to keep filed away for about a year (or less) before shredding:
Bank, credit card, & investment account statements: Check your financial statements each month as they come in the mail or through your inbox. This is a good opportunity to spot any unusual activity or purchases and make sure your accounts are in good order. Often, fraudsters start with small amounts to see how vigilant you are before attempting larger purchases. If you plan on deducting any expenses on your tax return or need to provide bank information to a lender, keep these documents tucked away for about a year.
Receipts: Holding onto receipts can be more important than you might think, especially when using a credit card. They help you verify that the correct amount appears on your statement and make returns easier, increasing the likelihood of receiving a refund on the same card you used for the purchase. If you’re keeping the item, a receipt may be required to activate a warranty. Additionally, if you have business expenses or other tax-deductible purchases, keeping your receipts organized can help when it’s time to file your taxes. A little extra record-keeping now can save you time and hassle later.
Utility bills: Utility bills can, surprisingly, come in handy from time to time. If you need to provide proof of residence, most places will accept a utility bill with your name on it. Or, if you’d like to track your spending/expenses closely, keeping tabs on your bills each month may help you more accurately budget for the year ahead. And for those who operate a business out of their home, keep those utility bills as records for your future business deductions.
Mid-Term (1-10 years)
Some documents should be stored safely for a longer period of time, though eventually, they’ll be good to dispose of, too. These include:
Income tax returns: While last year’s tax return can be useful when filing this year’s taxes or working with a new accountant, you may need access to returns from the past three years in case of an IRS audit. In some cases, audits can extend up to six years, though this is rare. Keeping these records on hand ensures you’re prepared if any questions arise. [1]
House sale documents: After buying or selling your home, keep all related documents filed away safely for at least a few years. These will be important to have in the event there’s a legal dispute, if you need to provide your lender with additional information, or if you need them for potential tax deductions. In a perfect world, everything should be well and good once the sale has closed, but it’s better to be safe than sorry and keep all relevant information on hand, just in case.
Payoff statement: If you’ve paid off a mortgage, car loan, or other type of debt, keep the payoff statement for at least a few years. This document serves as proof that the loan was fully paid, which can be crucial in case of lender errors or credit reporting issues.
Forever
Certain financial documents should be kept in a safe but accessible spot for life. These include:
- Birth certificate
- Death certificate (of a parent, spouse, or other relative)
- Marriage license or divorce papers
- Social Security cards
- Military discharge papers
- Life insurance policy information
- Will
- Living will and healthcare directive
Declutter Old Documents in a More Secure Way
While some financial documents should be held onto, others are fine to discard. As you sort through old paperwork, be mindful of the information you’re throwing away and take the necessary steps to protect your identity and accounts from potential risks. A little extra caution now can go a long way in keeping your personal information secure.
Sources:
Kevin Stoddard, CFA® is the founder and president of Stoddard Financial, LLC. He holds the designation of Chartered Financial Analyst® (CFA®) and is a veteran in the financial services business with over three decades of experience. In 2004, Kevin founded Stoddard Financial, LLC. to help clients use their company benefits to improve their financial situation and leverage those and other assets to pursue and manage financial independence. Using his in-depth knowledge of portfolio management, he helps people transition from building wealth to using that wealth in seeking to create income and recognize what that looks like from an asset, income, and tax perspective.
The opinions expressed in this material are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security, investment, or other financial product.
This material has been prepared in collaboration with Crystal Marketing Solutions, LLC, and has been edited with the assistance of artificial intelligence tools. The information presented is based on sources believed to be reliable and accurate at the time of publication. This material is for educational purposes only and does not necessarily reflect the views of the author, presenter, or affiliated organizations. It should not be construed as investment, tax, legal, or other professional advice. Always consult a qualified professional regarding your specific situation before making any decisions.