SAVVY SENIOR

By Jim Miller

Dear Savvy Senior,

Is there a rule of thumb on how long someone should keep their old financial paperwork? I have file cabinets full of old receipts, bank and brokerage statements, tax returns and more that I would like to toss.

Recently Retired

Dear Recently,

It’s a great question. It’s difficult to know how long to keep old financial records and paperwork, and when it’s safe to get rid of them. Some things you’ll need to hold on to for your whole life, and others for just a month or so. Here’s a checklist that can help you determine what to save and what to throw away.

Keep one month:

• ATM receipts and bank-deposit slips, as soon as you match them up with your monthly statement.
• Credit card receipts after you get your statement, unless you might return the item or need proof of purchase for a warranty.
• Credit card statements that don’t have a tax-related expense on them.
• Utility bills when the following month’s bill arrives showing that your prior payment was received. If you deduct a home office on your taxes keep them for seven years.

To avoid identity theft, be sure you shred anything you throw away that contains personal or financial information.

Keep one year:

• Paycheck stubs until you get your W-2 in January to check its accuracy.
• Bank statements (savings and checking) to confirm your 1099s.
• Brokerage, 401(k), IRA, and other investment statements until you get your annual summary (keep longer for tax purposes if they show a gain or loss).
• Receipts for healthcare bills in case you qualify for a medical deduction.

Keep seven years:

Supporting documents for your taxes, including W-2s, 1099s, and receipts or canceled checks that substantiate deductions. The IRS usually has up to three years after you file to audit you, but may look back six years if it suspects you substantially underreported income or committed fraud.

Keep indefinitely:

• Tax returns with proof of filing and payment. Keep for at least seven years, but many people keep them forever because they provide a record of your financial history.
• IRS forms that you filed when making non-deductible contributions to a traditional IRA or a Roth conversion.
• Retirement and brokerage account annual statements as long as you hold those investments.
• Defined-benefit pension plan documents.
• Savings bonds until redeemed.
• Loan documents until the loan is paid off.
• Vehicle titles and registration information as long as you own the car, boat, truck, or other vehicle.
• Insurance policies as long as you have them.
• Warranties or receipts for big-ticket purchases for as long as you own the item, to support warranty and insurance claims.

Keep forever:

Personal and family records like birth certificates, marriage license, divorce papers, Social Security cards, military discharge papers, and estate-planning documents, including power of attorney, will, trust and advanced directive. Keep these in a fireproof safe or safe-deposit box.

To reduce your paper clutter, consider digitizing documents by scanning them and converting them into PDF files so you can store them on your computer and back them up on a cloud like Microsoft OneDrive, Apple iCloud or iDrive. You can also reduce your future paper load by switching to electronic statements and records whenever possible.

Jim Miller is a contributor to the NBC “Today” show. Send questions for him to Savvy Senior, P.O. Box 5443, Norman, OK 73070, or at savvysenior.org.