When to Shred Old Financial Documents

Managing financial paperwork can feel overwhelming, but knowing what to keep and what to shred can help you stay organized while protecting yourself. 

Here’s a simple guide to decluttering your records responsibly:  

Tax Returns

The IRS recommends retaining your tax returns for three to seven years, depending on how complex your tax situation is as an individual or a business. If you want to err on the side of caution and clear up some space, you can keep a digital record of all of your tax returns just in case. 

Bank Statements

You can typically keep your personal bank statements for one year before clearing up some space. If you are a small business owner, you may want to keep your bank statements for a longer period.

Pay Stubs

When tax season rolls around, you can use your pay stubs for the year to ensure the accuracy of your W-2. After that, you can dispose of them to make room for next year’s pay stubs.

If you have employees, you should hold onto payroll records for at least four years.

Investment Paperwork

For investments, it is a good idea to retain some of that paperwork for as long as you maintain your tax records. Some investment paperwork can be cleared out more regularly. For example, you could dispose of quarterly statements at the end of each year.

Insurance Information

You should keep paperwork on your insurance policies, such as your life insurance and medical insurance, as long as those policies are active. If all claims are resolved and you have moved to another policy, you can get rid of the old paperwork.

When you have older records you can clear out, remember to dispose of them properly. Shred them at home or take them to a business that can shred sensitive documents in bulk.

Have questions about your financial strategy? Get in touch today.