Paperwork ranks among the leading causes of household clutter. But most people don't really know what needs to be saved and what can be discarded. As a general rule of thumb, paperwork you must keep tends to be associated with five things: tax returns, legal actions, property/financial assets, retirement, and insurance. Even much of that paperwork has time limits after which, it too, can be discarded. Always consult with your own legal or financial advisors before discarding paperwork, but here are some general guides to get you thinking about how you might lighten your load:
Pay stubs: If applying for loans or jobs, you may need to produce a few recent, consecutive pay stubs; otherwise you can usually shred these documents - especially once you have verified W-2s in hand.
Purchase receipts and bills: If not associated with tax returns, you can typically shred purchase receipts and bills (once you have proof of payment) unless needed for warranty or insurance purposes.
Credit card documents: If you are satisfied the transactions are correct on your statements and they are not associated with claims on your tax returns, you can typically shred receipts. Cut down on paper by downloading and saving digital copies* of your statements.
Banking documents: ATM and other receipts can typically be shredded once verified against your statements. While lenders may ask you to produce a few recent bank statements, you can easily download and keep digital copies* or obtain from your bank if needed. For cancelled checks, hang on to anything associated with taxes and things like home improvements and mortgage payments.
Tax returns and payment records: Some will advise you to keep these forever along with supporting documentation; others say you can safely shred returns and supporting documents that are older than seven years.
Documents relating to your home: For paperwork documenting property purchases and sales, mortgage documents, tax payments, home improvements, and insurance, the consensus says keep these records anywhere from ten years to permanently.
Docs relating to medical expenses: Consensus recommends keeping from five to seven years, depending on whether or not expenses are being claimed on tax returns and/or you use a pretax Health or Flexible Savings Account.
Investments and securities: You can typically discard those massive piles of prospectuses. Balance statements do not need to be retained forever, but the consensus says hang on to all paperwork documenting buy and sell transactions for tax reporting purposes.
Insurance: Expired insurance policies can often be shredded after three to five years, but you may wish to retain home owners' insurance policies in case longer-term issues arise.
Retirement related: Keep anything and everything related to IRAs, 401Ks, pensions, and social security - basically - for as long as you remain alive.
*If opting to keep digital copies of bank, credit card, and other statements make sure you have a strong solution for encrypting and frequently backing up your data, especially if related to claims being made on your tax returns.