When you reach adulthood, there are lots of documents you'll want to keep track of. While you might think you'll remember everything, it's better to have a system for keeping track of important financial information than to try to rely on your memory. Here's a list of the key documents that every adult should organize.
Financial Documents Every Adult Should Organize: How Long to Keep Important Financial Records
One of the biggest challenges with organizing financial documents is knowing how long to keep them. Some documents are only necessary while you're dealing with the associated transaction, such as receipts for a purchase. Others are necessary for a longer period, especially if they affect your taxes. The IRS provides guidance on how long you should keep your tax returns and supporting documents - as well as other financial documents that may be important to keep.
- Keep your tax returns and related documents for at least three years from the due date of filing, or the date you filed, whichever is later. This is generally sufficient for the IRS to audit you for errors or omissions.
- Keep records for three years if you haven't reported all of your income on your tax return.
- Keep records for six years if you haven't reported income that you should have reported, and it's more than 25 percent of the gross income shown on your return.
- Keep records for seven years if you file a claim for a loss from worthless securities or bad debt deduction.
- Keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later - if you file a claim for credit or refund after you file your return.
Documents to Organize Before You Retire
If you're approaching retirement age, there are certain financial documents you should organize before you retire. The Social Security Administration recommends that you start receiving retirement benefits as early as age 62. However, your benefit amount will be reduced if you begin collecting before reaching your full retirement age, which is between 65 and 67 depending on when you were born. Your benefit amount will also increase if you wait until age 70 to begin collecting. Therefore, you should organize the following documents before you retire:
- Your Social Security statement - which includes your earnings record and projected benefits.
- Your Medicare card and enrollment form, if you plan to enroll in Medicare at age.65
- Your employer's retirement plan documents, if you have a workplace retirement plan.
- Your beneficiary designations for any retirement accounts or life insurance policies you own.
Important Health Insurance Information
In addition to financial documents related to your retirement, you should also organize health insurance information. If you're not covered through an employer-sponsored plan, you may qualify for coverage through Medicaid. To determine your eligibility - you will need to know your household size and income. According to the Kaiser Family Foundation, adults with incomes up to 138 percent of the federal poverty level are eligible for Medicaid in the 41 states that have adopted the Medicaid expansion. However, eligibility criteria vary by state, so you should review the specific requirements for your state. Additionally, you should keep copies of any health insurance cards and policy documents.
Retirement Planning Worksheets
The Department of Labor offers free retirement planning worksheets that can help you set savings goals and timelines. These worksheets can be completed online or downloaded as a PDF. You can find the worksheets on the DOL website.
To use the worksheets - you will need to provide information such as your current age, expected retirement age, desired retirement lifestyle, and estimated Social Security benefit amount. Based on this information, the worksheet will calculate how much you need to save each month to achieve your retirement goals. It will also show how much you could potentially earn if you invest in stocks - bonds, or mutual funds. By using these worksheets, you can create a personalized retirement plan that meets your needs and goals.
In addition to these worksheets, there are many other resources available to help you plan for retirement. For example, you can use online calculators to estimate how much you need to save - or you can consult with a financial advisor for personalized advice. Regardless of the tools you use, it's important to start planning for retirement as soon as possible to ensure that you have enough money to live comfortably in your golden years.
Conclusion
By organizing these documents, you will be better prepared to manage your finances, plan for retirement, and maintain your health. Don't wait until it's too late - take action now to ensure that you have all the information you need to make informed financial decisions.
For more information on organizing your financial documents - visit the IRS website or consult with a financial advisor.
Further reading
- https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records
- https://consumer.ftc.gov/articles/how-organize-your-important-papers-disaster-strikes
- https://www.familyhandyman.com/article/age-to-stop-mowing-lawn/
- https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping
Disclaimer
This article is a personal reflection shared for general informational purposes only. It is not financial, investment, insurance, or tax advice. For decisions about your own money, please consult a qualified financial professional.
