Sorting out obsolete documents

February 12, 2019

 

 

This weekend I have spent some time for going through my own financial and household documents and sorting out what is not needed anymore. The picture above shows the resulting pile of papers waiting for the shredder.

 

You might ask yourself whether I had such a big mess or whether my documents were not organized at all... But no, this process is needed from time to time, even if you keep a meticulous order in your files! Let me explain why:

 

  • Some documents have just reached their "storage lifespan". For example, tax-related receipts and documents (not the actual tax return) can be thrown away seven years after the filing year.

  • Some changes in your life might have happened which require some re-organization of the documents: In my case, two children have moved out of the house. I gave them their personal documents with them. Due to this, I had some half-empty files or binders, which can be used in a more efficient way. And I even found some documents I forgot to gave them, they are also sorted out now.

  • Most people collect several versions of insurance policy letters. Over time, you have quite a bunch of outdated versions.

 

So after looking through all the papers, I have now a clean order again and a lot of free space. So I do not have to do the same thing before some time passed. Most likely in about three years later, a new round might become necessary.

 

Before you start doing the same in your house, keep in mind the rules about how long you have to keep your records:

  • Tax returns: At least seven years after filing, I recommend longer. Personally, I do not throw away the tax return, but shift them to a more remote storage location after seven years.

  • Tax-related receipts: Seven years after filing. Some people will tell you three years is enough. It is correct that an audit can happen during three years after the filing. But fraudulent filings and the related investigations can take place up to seven years after the filing. And this includes not only your own return, but your data could be needed in case of related investigations (e.g. employer, partner etc.)

  • Certificates and documents related to securities and assets (real estate, shares, funds etc): keep them as long as you hold the security.

  • Yearly statements of your retirement funds: Keep them until you retire. In case there is a mistake or some contributions get missing, you have the related documentation.

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