How Long Should I Keep This?

How Long Should I Keep This?

Recently, I finished reading a book called, The More of Less, by Joshua Becker. The book promotes the idea that most of us own more “stuff” than we really need or even want and that this clutter can “distract us from the very life we wish we were living.” This is a topic that has increasingly gained my interest, and it has very practical applications for our clients, especially when it comes to paper clutter.

While helping a family member declutter her paper files last year, I found records that were nearly as old as I am. I found utility bills, insurance renewals, and tax records dating back to the early 1980s. In addition, I located an original trust document from 1983 which still had stapled to it the $5 bill used to open the trust. I also found stacks of trade confirmations and brokerage account statements, including the one pictured above: a Fidelity IRA statement from 1985, quite a find for an investment geek like me!

So in the interest of living with less clutter, which documents should you keep, and which ones can you safely discard?

Let’s start with brokerage statements. Charles Schwab and many other custodians now retain electronic copies of account statements and trade confirmations for up to ten years. A law passed in 2012 requires custodians to track cost basis on securities purchased within the account, which further diminishes the need to keep trade confirmations. For any securities purchased in taxable brokerage accounts prior to 2012, you may wish to hold on to trade confirmations until you sell those securities.

Financial Synergies also distributes a quarterly report. Half of our clients already receive the report electronically, but the other half still get paper statements. While we’re glad to continue sending the paper version, please let us know if you’d like to try electronic delivery. A PDF copy of the statement will be saved in your online document vault for future retrieval should you ever need it.

How about tax records? The IRS website states that individuals should keep tax records and receipts for three years unless 1) you don’t report income that you should have reported, 2) you don’t file a return, or 3) you file a fraudulent return. I sure hope none of these exceptions applies to you, but if so, please see the IRS Publication 17, Section 26 for more detailed rules on record keeping.1

For utility bills, such as cellular, cable TV, phone, water and electricity, I recommend holding no more than 12 months’ worth of statements and discarding the oldest statement as you receive new ones. Almost all utility companies now provide online delivery of statements and many retain electronic copies for 12 – 24 months.

You may also wish to consider a program called FileThis. The service links up to your online accounts and pulls in the statements automatically. You can use this program to store utility bills, credit card statements, and health insurance Explanations of Benefits (EOBs) so you can avoid receiving any paper statements, ahem, clutter, in the mail. The app uses 256-bit encryption (the same security level as banks) and integrates with other productivity apps such as Evernote, Dropbox, or Google Drive.2

As our world continues to become increasingly complex, I find myself searching for ways to reintroduce simplicity into my life. If you do as well, start simplifying by decluttering the paper.

Sources:

1 IRS Publication 17; https://www.irs.gov/publications/p17/ch26.html#en_US_2016_publink100022796

2 https://filethis.com/

Bryan Zschiesche

Bryan Zschiesche

Bryan is a CERTIFIED FINANCIAL PLANNER™ and a Qualified Kingdom Advisor™. He uses his expertise to develop investment strategies to protect and grow clients’ retirement savings. Bryan is a proponent of Elegant Simplicity, the idea that we can work through complex issues surrounding a financial problem and arrive at a sophisticated but simple solution.

 
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