Have you opened your file cabinet recently? If you’re anything like me, you may have color-coded file folders stuffed with decade-old receipts, investment statements, and phone contracts that are no longer valid. Just like you’d declutter your garage for those summer projects, it’s time to give your file cabinet a refreshing summer clean-up too! In an effort to help simplify your “keep it or toss it” dilemma, we created a quick guide of what actually deserves a spot in your file cabinet.
Annual Retention
Your bank and investment statements. If everything matches, you are good to shred. However, in the days of digital statements, make sure you have a list of what assets you have and where they are stored for your beneficiaries in case something happens to you.
7 Year Retention
Tax Returns
Tax-related Receipts: If a receipt supports a tax deduction, keep it with your tax return.
Business Expenses (if not longer)
Lifetime Retention
Life Insurance Policies: Life insurance policies should be kept for the duration of the policy and if the benefits might be payable. For a permanent insurance policy, this would mean your entire life. A term policy until your term expires. Make sure your loved ones know where your policies are stored in case something happens to you.
Auto Insurance Policies: Keep your auto insurance policies for the “lifetime” of the policy as long as the policy and for a buffer of a few years if there are possible claims that could be submitted.
Mortgage and Debt: Keep through the lifetime of the loan, plus at least a 7-year buffer if you claimed any tax deductions off things like interest.
Home Renovations: Improvements to your home increase your basis. This becomes important when you decide to sell your house and impacts the possible capital gains taxes owed. If you renovate/improve your home, keep track of all expenses and receipts to support the increase in basis.
Contracts: Keep copies of contracts through the duration of the contract term and hold for a buffer if you think you may need to refer to the contract terms after the fact.
Estate Planning Documents: Keep updated copies of your will, living will, trusts, etc. in a place that your personal representative would know where to find it. An itemized list of assets that is updated routinely with the location and titling of assets is also beneficial in the event of estate settlement. You would want to keep documents like life insurance policies (If you skipped over Kaitie's Deep Dive into estate planning, we highly suggest take a few minutes to read!)
Large Purchases (cars, appliances, etc): Keep your warranty and invoice information until you no longer have the item.
There is definitely an underlying theme in all of these retention policies: Make sure your loved ones know where your policies/assets/estate planning documents are stored in case something happens to you!
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