Keep vs. Shred: How Long Should I Keep Financial Documents?

We understand how overwhelming it can be to not only keep track of all your personal documents, but also know which to keep and for how long. Certain documents like birth and death certificates, social security cards and others may need to be kept indefinitely while other documents have a much shorter shelf life, such as utility statements or phone bills.

Let’s walk through how to organize your documents so you can determine which important documents you’ll need to hang on to and for how long, as well as how to properly dispose of documents you no longer need.

Shred What You Know You Can

Do you have a pile of stashed receipts, junk mail or other documents in your home or car that you’ve been meaning to sort through? Instead of simply throwing those papers in the trash, we recommend shredding any items that include information on them such as your name, address or other personal information. Shredding these documents is an important step you can take to protect yourself against fraud or identity theft. The first rule in preventing identity theft is: if you don’t need it, shred it!

Multiple times a year, SDCCU hosts free Shred Events available to all community members to help guard against fraud and identity theft. It is important to note that events have been postponed due to COVID-19, but you can follow us on social media to stay updated once events resume.

Get Your Documents Organized

The first step to getting your financial documents in order is understanding which you should keep, and which should eventually be shredded. Even though technology has enabled people to go paperless with options like eStatements and eReceipts, we know many people still prefer paper documentation. However, keeping sensitive documents around for too long is a habit you should try to break. These documents will not only clutter your home, but could get lost or into the hands of a criminal.

Here’s a helpful breakdown of how long to store certain sensitive documents:

What to Keep for 1 Month

  • Utility, cable and cell phone bills (keep longer if needed for tax deduction purposes)
  • Credit union/bank deposit receipts
  • Credit union/bank withdrawal receipts

What to Keep for 1 Year

  • Pay stubs
  • Regular statements (bank or credit cards)

What to Keep for 3 Years

  • Medical bills
  • Previous insurance policies (if you have switched or canceled)

What to Keep for 7 Years

  • Tax returns
  • Tax related records like W-2s, 1099, investment income, charitable contributions, alimony, etc.
  • Home purchase or sale records (keep during ownership + 7 years after selling)
  • Home improvement records (keep during ownership + 7 years after selling)

What to Keep Forever

  • Birth certificates
  • Death certificates
  • Marriage certificates
  • Marriage licenses
  • Divorce decrees
  • Wills
  • Social Security cards
  • Pension plan documentation
  • Mortgage documentation
  • Loan documents

Implement a System That Helps Keep Your Records Organized

Now that you know how long to keep documents, it’s time to start creating a system in your home to keep track of all these important documents. Here are a couple of helpful options:
  • Home filing system: If you have an open cabinet in your home office or other area, you can turn that empty space into a neatly systemized filing area. We suggest creating dividers and categorizing your documents in a way that’s best for you. In Southern California where fire conditions are common with dry weather in summer and fall, a fireproof filing cabinet is recommended to protect important documents.
  • Go digital: If you can, opt into paperless. By going digital, you can easily create protected files on your computer where you can store your important documents without worrying about losing them.

Important Document Chart: What Records to Keep and For How Long

Another helpful strategy to keep track of all your documents is to create a spreadsheet that breaks down exactly what forms you have and when you received them. Having this “living” document you update periodically is helpful when you receive new documents or need to properly dispose of sensitive documents. This organization will also have other benefits like helping you better prepared for tax season.

Here is a reference guide for how long you should keep certain documents:
Document How Long Why?
Utility, Cable, Cell Phone Bills 1 Month Keep these until your next billing cycle as proof of payment.
Deposits & Withdrawals 1 Month Check for accuracy in your financial statements.
Regular Statements (Bank & Credit Cards) 1 Year Check for accuracy and can verify proof of income.
Medical Bills & Previous Insurance Policies 3 Years Keep in case of any legal disputes.
Tax Returns & Records 7 Years The IRS has three years to audit your return if it suspects goodfaith errors. The IRS has six years if it believes you underreported your income by at least 25% and an unlimited time if it is investigating fraud.
Home Purchase, Sell & Improvement Records 7 Years It’s good to keep these documents for the lifetime of ownership, then 7 years after due to tax implications.
Birth Certificates, Death Certificates, Marriage Licenses, Divorce Decrees, Wills, Social Security cards, Pension Plan Documentation, Mortgage Documents, Loan Documents Forever These vital documents that should be kept in a safe place for your lifetime.

Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for
Financial Wellness Wednesdays.

Consult your tax advisor.