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Good Question: How Long Should We Keep Financial Documents?

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(credit:  Justin Sullivan/Getty Images)

(credit: Justin Sullivan/Getty Images)

(credit: CBS) Heather Brown
Heather Brown loves to put her innate curiosity to work to answer yo...
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MINNEAPOLIS (WCCO) – This time of year, many of us talk about getting our finances in order. A WCCO-TV viewer named Rachael from St. Joseph wrote us asking how long she should keep her financial documents.

“I decided to shred documents from two years and my brother said his wife has 20 years worth of her documents saved!!! Eeeek! Is she obsessive or am I too lenient?????,” she wrote.

According to Justin Halverson, a partner with Great Waters Financial, it depends on the document.

As for tax returns, he suggests the IRS recommendation of seven years.

“The IRS has three years to audit unless they suspect you’ve made a bigger mistake, then they have six years,” Halverson said. “So, if you keep seven years, you’ll be in the clear on that one.”

What you should keep longer:

– Year-end loan documents for the life of the loan
— W-2 forms
— Big-item receipts for insurance purposes
— Current insurance policies
— Investment statements

“You don’t need to keep all the monthly statements, I would keep the annual statements for the life of that investment,” Halverson said.

What’s not necessary to save:

– Utility, cable or phone bills
— Old, resolved insurance claims
— Old Social Security statements
— Paystubs – after one year or after they’ve been reconciled with your W-2
— Credit card statements once you’ve reconciled monthly payments
— Bank statements – after one year.

“They come online, so I don’t need to save those,” said Sharol Eggenberger, while shopping inside Southdale mall.

Many documents can be scanned or saved. Almost all banks and credit card companies offer online statements for a year or more. Ron Holloway of Golden Valley saves all of his information on the Cloud, so he doesn’t have papers filed all over his house.

“No, we’re way past that,” he said. “It’s a different time now.”

Halverson always recommends shredding personal documents.

“Twenty years is probably too long,” he said. “But two years might be a little too short, especially for things like tax returns and things of that nature.”

For more information, the government offers an advice sheet.

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