2. What is a record?
3. Why should I keep my records organized?
4. Where should I keep my records?
5. How can I prepare my records for a disaster?
6. How should I organize my records?
7. How long should I keep my records?
8. How do I destroy records I no longer need?
When was the last time you couldn't find an important paper? This guide will help you answer these questions:
- How do you decide which records are important to keep and which ones you can discard?
- How do you decide where to store and keep your records?
- How long should you keep your important papers?
- How should you dispose of the records that you no longer want or need?
A record is a document that can provide permanent evidence about a past event. Some examples of records include:
- Birth certificates, marriage licenses, and death certificates (also known as vital records)
- Bank and credit card statements
- Investment records and statements
- Military discharge papers
- Real property deeds
- Automobile titles
- Insurance policies
- Medical information
- Employment related documents
- Purchase receipts and product warranties
- Wills and powers of attorney
- Tax returns and documents
- Important correspondence
- For tax purposes. It will make your life easier when tax season rolls around if you have all of your financial information neatly organized.
- As proof of ownership. If you sell an asset, you’ll need to transfer over ownership, including proper title. If your ownership is challenged, you’ll have the documentation readily available to prove it.
- In case of an emergency. If a natural disaster struck or if you suffered an accident, you’d want to make sure your documents were in order and safe.
- As documentation in case of disputes. You never know when you’ll need to go back and prove that so-and-so really did call you on such-and-such date. Keeping detailed records of all your important transactions may help you in such a situation.
- To save time. When something comes up that requires an old receipt or document, you won’t have to go digging through your junk drawer. You’ll know where to find it.
When deciding where to safely store your records, you need to think about many possibilities including:
- Natural disasters such as floods, tornadoes, and earthquakes
- “Prying eyes” (roommates, domestic employees, landlords, etc.)
- Providing for access by family members or others in the event of your death or hospitalization.
- Identity theft
- Convenience and ease of access
Unfortunately, there is no “one size fits all” solution. A safe deposit box is a good choice for documents that are difficult to replace, such as vital records, deeds, and titles. It’s a good idea to make copies of these documents and keep them with your “easily accessible” documents for quick reference. The FDIC publication 5 Things to Know About Safe Deposit Boxes contains additional guidance.
However, you will want to keep most of your records in a location that is more easily accessible than a safe deposit box. Some alternatives are:
- Paper documents can be kept in a locked drawer or filing cabinet inside your home. A fireproof safe is best.
- Electronic or digital records should be both encrypted and backed up. Encryption is important in the event that the data is lost or stolen. Backing up your data helps protect you from ransomware and computer failures. There are many products on the market that securely store data, such as USB drives, CDs, and external hard drives. Whatever you choose to use, make sure the data is encrypted.
- Records can also be stored online with a cloud provider. Cloud storage is becoming increasingly popular. However, storing data in the cloud has its own risks because you aren’t in control of the physical servers that contain your records.
Consider storing your information in more than one place and in more than one format. Such redundancy protect in the event there is a failure (e.g., computer failure) or loss (e.g., fire) in one of the storage locations.
Nobody likes to think about the possibility of a natural disaster or a terrorist act. However, it’s important to prepare your personal records for a disaster before it happens.
Different types of disasters are likely to result in different consequences. You may be asked to shelter in place, to evacuate to a facility in your own community, or possibly to relocate to a far-off location in another state. Or you may choose to stay with a relative or friend. Likewise, you may be able to return to your home after a short while, or there may be an extended period of absence. In the worst case, your home and its contents may be completely destroyed. Consequently, it is difficult to provide specific advice that will apply equally to every situation. Instead, we offer a number of suggestions that may or may not apply to a particular disaster situation. The key word to remember in planning for disaster is “redundancy.” That is, don’t expect that everything will go according to plan. Have an alternative or back-up plan in case the disaster precludes you from following your original plan.
These tips that can help protect you in the event disaster strikes:
- Create a list of account numbers and contact information for banking, credit cards, insurance policies, investments, and other financial service providers. You can also include basic medical and prescription drug information. This list can be saved on an encrypted USB drive and stored securely in an accessible, but locked area in your home. If disaster strikes, you can grab the USB drive and take it with you. Remember to keep this information up-to-date for yourself and family members.
- Be sure that original copies of important documents (such as birth certificates, wills, marriage certificates, and Social Security cards) are properly secured. You may wish to keep them in a safe deposit box, or you may want to carry them with you. Each alternative comes with its own risks. You risk loss or theft if you carry these documents with you. But, if placed in a safe deposit box, you may not have access to them if you need to relocate far away, or if access to the box is temporarily impeded by the disaster. The best solution is to keep the originals in a safe deposit box and to keep copies with you. If you do use a safe deposit box, you will be given two keys. You may want to keep one key in a very secure yet quickly accessible location (perhaps where you store a USB with important information). You may want to carry the second key with you, in case you need to leave quickly.
- If you decide to carry the information with you, never let these documents out of your sight (or that of a family member). You might consider a backpack or attaching a bag with the documents to the inside of your clothing with safety pins. Some travel catalogs sell pouches that are worn under the clothing.
- All unnecessary documents containing personal information should be shredded or carefully secured on an ongoing basis—before disaster strikes. Shred unnecessary documents containing sensitive information regularly, and secure important documents in locked file cabinets. During a flood or tornado, documents could be scattered over a wide area. If looting were to occur, thieves might enter your home in search of such documents.
- If you live in an area that might be prone to flooding, place important documents and portable media devices (USB flash drive and hard drives) in an airtight, waterproof plastic bag to help protect from water damage. This also applies to documents and devices stored in safe deposit boxes in flood-prone areas.
- Consider scanning important documents and saving them on a USB flash drive that you carry with you. Make sure that the flash drive is properly encrypted. This can be useful for documents on which an original copy is not required (insurance policies, old tax returns, medical histories, and vital records).
- You may also wish to save duplicate copies of important documents at a safe location far from your residence, perhaps with a trusted friend or relative. That way, in the event of a major regional disaster, you may be able to access this information. Alternatively, provide a USB flash drive with such information.
- You likely will need to have originals of documents such as driver’s licenses and passports. You may need such documents to prove who you are in order to obtain benefits, claim your property, or, if relocated permanently, to apply for a new driver’s license or a new job. Keep your passport (which is not normally something that you carry with you in your wallet) in a secure but accessible place where you can grab it quickly.
First, decide if you want to keep primarily paper or electronic (digital) records. For some documents, it's best to keep the original paper form. Examples of documents that should be kept in their original paper form include: birth, marriage, and death certificates, licenses, deeds, title certificates, Social Security cards, wills, and powers of attorney. But, many other paper records can be scanned into an electronic version.
Next, create a filing system that works for you. Some suggested categories include:
- Tax documents. Save any records that support items shown on your submitted tax returns. When in doubt, ask your accountant, attorney or tax preparer. Also, save any records that may be needed for future tax returns. For example, keep receipts of home improvement projects so that when you sell your home, you can calculate the capital gains tax.
- Financial documents. This includes receipts, credit card and bank statements, bills, credit card agreements, loan documents, credit reports, insurance documents. Organize receipts by date. Everything else can be organized by company first and then by date.
- Medical records. Save bills, notes from doctor visits, test results, and prescription information. It’s best to simply organize all medical documents by date so that you have a clear timeline of events.
- Employment documents. Save employment contacts, performance reviews, employee manuals, vacation authorization, documentation of your sick days, continuing education certificates, and any important notices that affect your benefits. Assuming you’ll work for more than one employer in your lifetime, it’s best to organize these by company first and then by date.
- Proof of ownership. Save any documents that prove you own your big purchases and most valuable assets. This includes deeds for real estate, other mortgage papers, automobile titles, major appliances, electronics, jewelry, and bond and stock certificates. It’s easiest to organize these by date.
- Proof of Person. This includes any official government documents that pertain to you as a person, such as your birth certificate, your passport, marriage license, military service papers, Social Security card, citizenship records, adoption papers, and so on. Organize these by date issued. If you have lost any of these documents, consider applying for replacements before there is a pressing need. For more information, visit Centers for Disease Control and Prevention: Where to Write for Vital Records.
Once you have a filing system in order, be sure to properly file your records as you obtain them. Some find it helpful to have an “inbox” where you can place records temporarily. If you use an inbox, be sure to set aside time once a week or month to go through the inbox and file the records away.
Once a year, go through your records. For each record, decide if it should remain active, be permanently archived, or be destroyed. Active records are ones that you’ll need to have handy in the near future (usually less than three years old). Archived records are important records that you don’t need to keep on hand, but that may be helpful in the future. Records that can be destroyed are those that no longer serve any purpose.
You might be tempted to hang on to records permanently, especially if you’re storing them electronically. But, storing records you no longer need takes up space and makes it more difficult to find the records you need.
- Proof of title or ownership. Keep active until you sell the asset. Then, permanently archive the associated records.
- Credit card and loan agreements. Keep for as long as the account is active.
- Credit card and bank statements. After a year, destroy them unless they have tax significance.
- Credit reports. Keep until you order your next free annual credit report.
- Home and car insurance policies. Keep until you get your next policy in the mail.
- Medical records. Keep permanently.
- Vital records and proof of person. Keep permanently.
- Employment records. Every time you leave an employer, go through your file and destroy employee manuals, vacation requests, and other documents you won’t need moving forward. (Note: if you’re parting ways on bad terms, you may want to hang on to these documents a little longer, just in case you need to dispute something.) Save everything else. You will find it helpful during future job searches.
- Old tax returns. For tax records, the general rule is three years, because the IRS can audit your return within three years of its filing date. However, if the IRS suspects you of underreporting your gross income by at least 25% or if you’ve filed a fraudulent report, the agency has longer to challenge you (six years and indefinitely, respectfully). If your state has an income tax, you should also check with your state’s taxing authority to see if they require you to hold your tax records for a longer period of time. For example, in California, the Franchise Tax Board can issue a tax assessment for up to four years after the tax return’s filing date or due date. As a practical matter, this means that California residents would need to hold onto their records for an additional year beyond the federal requirements.
- Other. It depends on the record. If you aren’t sure, 10 years is a good retention period for legal reasons. That span exceeds the statute of limitations for most purposes.
After you’ve determined that you no longer need a record, it is very important that you permanently destroy it. Otherwise, you run the risk of identity theft. Crooks can “dumpster dive” or obtain used computers, looking for sensitive personal information.
- Paper records - Shred or incinerate them. Always use a cross-cut, diamond-cut, or confetti-cut shredder. Unlike strip-cut models in which the pieces can potentially be put back together, these shredders will produce much smaller pieces.
If you have a large amount of shredding and are not able to handle it at home, consider taking it to a shredding facility that guarantees and certifies that your documents are fully destroyed. If you have a large amount of papers to destroy (this can occur, for example, when an elderly family member passes and the family must dispose of decades of documents), there are services that will send a shredding truck to your home. Fees are charged for both types of services.
Read the Federal Trade Commission's (FTC) A Pack Rat's Guide to Shredding for more information on what and when to shred. Also see the FTC's infographic summary of their recommendations.
- Digital records – Destroying digital records can be tricky, because “deleting” a document or file doesn’t really erase all of the information. If you’ve been properly storing your data, all of your files are encrypted anyway, but, it’s still a good idea to permanently destroy the information.
- On a computer – Use specialized software such as Eraser to remove specific files. To delete an entire hard drive’s data, use software like Darik’s Boot and Nuke. Note: before recycling or selling your old computer, make sure you've successfully destroyed all personal data. You may be better off physically destroying the hard drive and taking the computer and destroyed drive to an electronics recycling center.
- On a portable storage device – Flash drives use the same methods as computers. CDs and DVDs should be physically destroyed by breaking them into many pieces. Some shredders can do this. If you are destroying older media, such as floppy disks and tapes, remove the film and cut it into small pieces.