We all have important papers, but how do you know what you really need vs. what you can toss? David shares what to shred and what to hold onto when it comes to your financial records.
As a follow up to our discussion about financial documents, we wanted to talk about how to get organized with those records. Some things you keep and some things you should toss! In fact, David and his office have a shred day scheduled for Tuesday, May 17 and anyone is welcome to join. But what things should you bring to shred and what is better kept safe?
Clients often keep investment statements from their brokerage accounts for a long time. We used to need to know the cost basis to qualify for long-term capital gain. After 2011, custodians are required to keep that documentation for you, making those monthly records less important to hang onto. David says to shred these as soon as you review them.
Bank statements are easy to get electronically, so you may not even need a paper statement. Most financial institutions offer two-factor authentication when you login online to these accounts. This helps verify that it is actually you when doing things online.
How long do you need to keep your tax records? The last three years are key, but up to six years are helpful to have. Past that, you can put those in the shredder since that takes up a lot of space. What do you need for this current tax year? A few years ago you needed more documentation for itemizing, but the standard deduction is so high that you might not need that anymore.
Some documents you should retain forever such as a birth certificate or Social Security card. David uses a fireproof box at his home for these types of things, but another option is a safe deposit box. Make sure that your heirs are able to get to these documents if you die. Same with a will or power of attorney, make sure the right people know where those documents are and how to access them if needed.
If you own a home, you may want to keep all the documentation of home improvement projects. This can be helpful when you sell the home as you figure out the taxes on the sale. Receipts for other valuable items you have or pictures of the inside of your home should be kept in case something were to happen with your home.
If you ever want your question spotlighted on the show or to ask David something about your retirement, email him at [email protected]
Listen to the entire episode or skip ahead using the timestamps below to skip to a particular question.
1:45 - What should you do with investment statements?
4:37 - Should you keep bank statements?
7:08 - How long do you need your tax records?
8:39 - Do you need current year’s tax return documents?
10:50 - Birth certificates and Social Security cards are tough to replace.
13:22 - Wills and estate planning documents should be kept.
14:30 - Home improvement documents should be kept as long as you own the house.
16:59 - Receipts for valuable items you have should be kept.
“The longest you need to keep tax records is six years."
– David Dickens
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CONTACT US
OUR LOCATION
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Building 27, Suite 190
Overland Park, KS 66210
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