Broker Check

How long should I keep financial records?

September 17, 2017
Share |

Submitted by Guidant Planning on September 13th, 2017
There's a fine line between keeping financial records for a reasonable period of time and becoming a pack rat. In general, you want to keep physical copies of anything related to state or federal matters, including certifications, licenses or deeds. The reason is twofold: you want to have easy access to these in case you need them, and they're also a pain to replace because you typically need to make a direct request to the government agency, which takes a lot of time.

It's ultimately up to you to determine which records you should keep on hand and for how long, but here's a suggested timetable for some common documents.

1. Store permanently: tax returns, major financial records

Your tax returns are important documents to keep as part of your financial history. You’ll want to keep a permanent electronic or hard copy of each year’s tax return and any payments you make to the government. Additionally, it’s a good idea to hold onto records of major financial events such as legal filings or inheritances.

  • Birth and death certificates
  • Social security cards
  • Estate plan documents(trust, wills, power of attorney and advanced healthcare directives)
  • ID cards and passports
  • Marriage license
  • Business license
  • Any insurance policy (good to keep even if they have a digital copy in case problems come up)
  • Vehicle titles and loan documents
  • House deeds and mortgage documents
  • Investment/Mutual Fund statements

2. Keep for 3-7 years: supporting tax documentation

Depending on your filing circumstances, the IRS may be able to ask you for supporting documentation for three to seven years after you file a return. Knowing that, a good rule of thumb is to save any document that verifies information on your tax return—including Forms W–2 and 1099, bank and brokerage statements, tuition payments and charitable donation receipts—for three to seven years.

**The IRS requires taxpayers to keep records that support income, deductions and credits shown on their income tax returns until the period of limitations for that return runs out--generally 3-7 years, depending on the circumstances.

3. Store for 1 year: regular statements, pay stubs

Keep either a digital or hard copy of the past year’s worth of your monthly bank and credit card statements. You should also hold on to pay stubs so that you can use them to verify the accuracy of your Form W-2 when tax season arrives.

Medical records and bills (keep at least a year after payment in case of disputes)
Pay stubs and bank statement

4. Keep for 1 month: utility bills, deposit and withdrawal records

If you’re self-employed, you may need your utility, cable and cell phone bills for tax purposes. Otherwise, you can dispose of them as soon as you verify your payment was processed. You can also dispose of bank withdrawal and deposit slips after verifying them with your monthly statement.

Finally, the last subset is the documents you need to keep the most recent version of:

  • Social security statements
  • Annual insurance policy statements
  • Retirement plan statements (401(k), 529, IRA, etc)

How can you keep your documents secure?

5. Safeguard your information

For physical documents, designate a safe, out-of-the-way place in your home to store all paper records that protects them from damage or theft. For digital records, be sure to archive and back up all electronic records. It’s a good idea for these records to be password protected.

6. Guard your online financial accounts

Use complex passwords and change them often to keep your account information safe. Make sure your username and password combination is different from the ones you use for personal email, online merchants and social media accounts. Protecting your computer with antivirus software is also a good idea.

  • Keep security software up-to-date
  • Ask for protection beyond passwords. Many account providers now offer additional ways for you verify who you are before you conduct business on that site.
  • Combine capital and lowercase letters with numbers and symbols to create a more secure password.
  • Separate passwords for every account helps to thwart cybercriminals.
  • Along with computers, smart phones, gaming systems, and other web‐enabled devices also need protection from viruses and malware.
  • Everyone can forget a password. Keep a list that’s stored in a safe, secure place away from your computer.
  • Links in email, tweets, posts, and online advertising are often the way cybercriminals compromise your computer. If it looks suspicious, even if you know the source, it’s best to delete or if appropriate, mark as junk email.
  • Limit the type of business you conduct and adjust the security settings on your device to limit who can access your machine.
  • Be wary of communications that implore you to act immediately, offer something that sounds too good to be true, or ask for personal information.
  • Report stolen finances, identities and cybercrime to (Internet Crime Complaint Center) and (The FTC).

7. Properly dispose of paper documents

You’ll put yourself at risk of fraud or identity theft if you simply throw away a large pile of private documents, such as financial statements. Invest in a cross-cut shredder that will eliminate all traces of your personal information.

Over the years you may have amassed seemingly countless sensitive documents. Guidant Planning's Bi-annual Shredding Party is coming up, look for the invitation in the Spring. This is a great opportunity to shred large amounts of documents safely and efficiently. This is an opportunity to shred anything that has personal information like your name, address, phone number, social security number or bank account information. This might include a few documents you don't initially think about, including ATM receipts, credit card receipts, bills, used airline tickets, expired credit cards, visas, passports and IDs.

CLICK HERE to see the Shred Truck in action at last year's Shredding Party.

Sources: Lifehacker, Gizmodo Media Group & Guidant Planning, Inc.

**PLEASE NOTE: The information above being provided is strictly as a courtesy. When you link to any of the sites provided here, you are leaving this site. We make no representation as to the completeness or accuracy of information provided at these web sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to. Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer (Member FINRA/SIPC). Advisory services offered through Guidant Planning, Inc. and First Allied Advisory Services, Inc. Both Registered Investment Advisers. Guidant Planning, Inc. is not affiliated with First Allied Securities, Inc. and/or First Allied Advisory Services, Inc. Allen G. Yee CFP®, RFC, CWS®, CA Insurance License #0747874

Tags:
allen yee
Fraud/Scams
Protection