A frequent question after tax time is, “How long do I hold on to all these documents?” While some like to keep their documents long enough to burden their heirs with the chore of deciding what to discard and what to keep, most prefer to get rid of them after they’re no longer necessary. The problem is, how long is long enough? The following table should help.
| Document Type | Retention Time |
Bond & stock certificates | As long as property is owned, until sold, discarded, or donated |
Bank statements | Needed to support tax filings |
Contracts (prenuptial agreement, leases, rental agreement, etc.) | Until updated, renewed, or no longer owned |
| Tax Records | Seven years from the filing date |
Birth certificates | Forever |
Smart Money Tips
- Teach your children to save. In addition to Earth Day, April 22 is National Teach Children to Save Day. Banks are promoting children’s savings accounts. Whether you use bank savings accounts or investment accounts, the sooner you can encourage youngsters in your life to get into the savings habit, the more likely they will grow up to become regular savers. If you have children or grandchildren who have W-2 earnings from full- or part-time employment, and you can spare the money, give them the gift of an IRA – a wonderful place for young adults to save for their financial future. Whatever your situation, at a minimum, encourage younger generation family members to save. For information on ways to build a generation of savers, visit: Teach Children to Save.
- A lesson in loan repayment. Americans are once again gorging on debt which recently reached $17 trillion. One of the unpleasant byproducts of loading up on consumer loans is the inevitable need to pay them down. This is called “deleveraging” and it is always a good thing to do, but it’s also tough to do. The reason it is so difficult is that most loans and loan interest have to be paid back with after-tax dollars. So, for example, in order to make a $500 credit card or car loan payment, you ‘ll have to earn about $750 because about one third of your gross income will be subject to federal, state, and Social Security taxes. ($750 income minus $250 taxes equals $500 available to put toward the loan.) But don’t let that unpleasant fact deter you from reducing your debt. The less debt you have in the future, the better.
Food for Thought
Every strike brings me closer to the next home run.
-Babe Ruth
Money Can Be Funny
Whoever said money can’t buy happiness didn’t know where to shop.
-Gertrude Stein
Word of the Week
pellucid (puh-LOO-sid) – adjective – Admitting the maximum passage of light; clear; easy to understand
Origin: From Latin pellucidus, from perlucere (to shine through) + lucere (to shine). Pellucid and lucid differ only to degree. Pellucid is lucid to the max and is usually used to describe physical things.
The water surrounding Bermuda is so pellucid that the island’s coral is easily visible from outer space.