The Great Paper Chase: What Documents Are Worth Keeping (And For How Long)?

Let’s face it: paperwork isn’t anyone’s favorite pastime. You're not alone if you’ve ever wondered whether you need to keep that receipt for a $5 coffee from last year or that electric bill from three summers ago. Here's your guide to keeping your filing cabinet in order and your stress levels in check—sprinkled with just enough humor to make sorting through files slightly less painful.

Tax Records: Don’t Shred Just Yet

Taxes might not be exciting, but Uncle Sam insists on a long memory. Keep these on hand:

• Tax returns and supporting documents: Hang onto these for at least three years (or six if you “accidentally” forgot to report 25% of your income).

• W-2s: Save them until you start collecting Social Security.

• Worthless securities or bad debt deductions: Keep records for seven years.

• Personally I have every tax return I've ever filed but then again I'm also a CPA.

  
  

Tax rules vary by state, so if you’re a Californian or live somewhere else with aggressive tax agencies, err on the side of caution and keep records longer.

Health and Wellness: For Your Records, Not Just Your Health

Your body is your temple, and so is your filing system for health-related documents:

• Medical receipts if you’re using a Health Savings Account (HSA): Hold onto these indefinitely.

• Medicare Summary Notices: Save them for a year or until your bills are paid.

• “Notice of Creditable Coverage” from employer drug plans: Necessary if you enroll in Medicare Part D later.

It may sound tedious, but these could save you from future headaches—literally and financially.

Legal Must-Haves: Where to Draw the Line

If it’s legal, it’s important. But how long should you keep these documents?

• Marriage and divorce certificates: Keep indefinitely. Whether you’re proving your marital status or reminiscing about your glorious single days, these are a must-have.

• Estate planning documents: Securely store wills, trusts, and powers of attorney. Share copies with your executor or trustee.

• Military discharge papers: Veterans, don’t let these go. They might be your ticket to well-deserved benefits.

  
  

Show Me the Money: Financial Accounts

Your bank statements might not make for riveting reading material, but they serve a purpose:

• End-of-year investment account statements: Keep these until you file your taxes.

• Pre-2012 investment purchase records: Custodians weren’t required to track cost basis back then, so you might need these when you sell.

  
  

Pro tip: Don’t accidentally throw these out in a Marie Kondo-inspired decluttering spree. They might not spark joy, but they could save you big bucks.

Home Sweet Paperwork

Whether you’re living large or still paying off that first mortgage, you’ll need a few key records:

• Loan documents: Keep them until the debt is paid off, then save proof of payoff forever.

• Receipts for home improvements: Essential for adjusting your cost basis when selling your home.

• Deeds and titles: Hold onto these until you sell the property or vehicle.

  
  

Small Business, Big Paper Trail

Entrepreneurs, your records are your lifeline:

• EIN and business formation documents: Keep these forever.

• Payroll and employment tax records: Retain these as long as required by federal and state guidelines. When in doubt, consult a tax professional.

• Business expense receipts and asset records: Keep these to support tax filings and track depreciation.

  
  

If you’re self-employed, your records might be the difference between a clean audit and a stressful one.

Safe Storage: Because Not Everything Belongs in a Drawer

Now that you know what to keep, where should you keep it?

• Safe deposit boxes: Ideal for irreplaceable documents like original wills or deeds. Keep in mind, though, that many banks are phasing them out.

• Home safes: A fireproof and waterproof safe is a brilliant place for things you need quick access to, like passports, birth certificates, or emergency cash.

• Cloud storage: Don’t underestimate the power of a secure, encrypted digital backup. Scan important documents and store them in a reliable cloud service—ensure your passwords are equally safe.

  
  

The key is redundancy: have at least two copies of essential records, ideally stored in different locations.

The Miscellaneous Pile

Not everything fits neatly into a category, but don’t toss these out just yet:

• Education records: Keep proof of completed coursework and certifications.

• Insurance policies: Keep the most current versions on file.

• Employment contracts: Hold onto these for as long as they bind you.

  
  

Final Thoughts: Organize or Agonize

While you don’t need to keep every receipt and utility bill, a little organization goes a long way. Set aside time each year to review your files and decide what stays and what goes. And for the love of all things paper, invest in a shredder for the things you don’t need—identity theft isn’t worth the risk.

Remember, managing your documents might not be glamorous, but it’s a surefire way to make your financial life smoother. If you need professional advice, don’t hesitate to contact a trusted financial advisor (hint: like the one reading this article).

WHWM is here to guide you in identifying your priorities, developing a plan, and making adjustments along the way. By choosing WHWM, you're partnering with our Founder and President, Stephen Bodwell. As a CPA and CFP® professional, Stephen is committed to helping you achieve your financial goals and aspirations. Don't hesitate to take the next step toward realizing your dreams. Schedule your complimentary, no-obligation 30-minute consultation with Stephen. 

Walnut Hill Wealth Management, LLC (“WHWM”) is a registered investment advisor offering advisory services in the State of Texas and in other jurisdictions where exempt. The information provided is as of the date indicated and is subject to change.