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Getting Organized – Which Financial Documents Should I Keep?

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Organizing your financial life can be a challenging task, leaving you with questions about which statements to keep and which statements to shred.

Start by making sure your filing system includes folders for each service, contract, or account. In addition, create a quick-reference inventory sheet of what accounts you have, who the advisor, agent, or lawyer is, and who the beneficiaries are.

Below are our recommendations for how long documents should be retained:

Investment statements

Focus on annual statements. If you have a brokerage account, keep your transaction statements to track your cost basis. Keep those statements for 7 years after you buy or sell a stock, bond, or fund in a non-retirement account.

Retirement accounts

For Roth IRAs and IRAs, keep records of your contributions as long as you have the account. This information is often on your year-end statements. Keep your 401(k) year-end statements as long as you have the account. Once your accounts are rolled over to an IRA, you can shred the old information.

Bank statements

Keep 3 years of statements in case you are audited. Many banks will do this automatically for you online.

Credit card statements

Check them for accuracy each month and then shred them. If you don’t keep receipts with your taxes, keep the statements detailing tax-related purchases for 7 years.

Mortgage documents

Keep them throughout the ownership of the property, plus 7 years.

Tax documents

While we recommend keeping them forever, the IRS recommends 3, 6, and 7 years depending on the specifics of the statements.

Many companies now offer electronic statements. Consider downloading and scanning your statements to a backup file system. The IRS allows you to keep electronic records and receipts. Make sure you back up and encrypt those files with either an external hard drive or online backup system. By taking a little time out of your month for proper filing, your information will be readily accessible when you need it most.

 

wisdom wealth strategiesAndrea L. Blackwelder, CFP®, ChFC and Joseph D. Clemens, CFP®, EA are the founders and partners of Wisdom Wealth Strategies. Their shared passion is simple: to bring financial empowerment, understanding, and peace-of mind to people who wish to improve their financial future, build wealth for their families, and achieve financial independence. Click here to find out more about how you can work with Wisdom Wealth Strategies.

 

 

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