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Law & Money | More at


What documents to keep, what to shred? By Jill Schlesinger You’ll be receiving bank, investment or retirement quarterly statements in the mail in early October, which makes it a perfect time to plan to fire up the shredder and organize that stack of documents piling up on the table. Here are some thoughts on financial paperwork that you can toss: Bank statements: Generally speaking, you only need to keep bank statements for one year, BUT, if you think that you may be

applying for Medicaid, many states require that you show five year’s worth of bank statements. Also, you should hold on to records that are related to your taxes, business expenses, home improvements, mortgage payments and major purchases for as long as you need them. Credit card bills: Unless you need to reference something on your credit card statement for tax or business purposes, or for proof of purchase for a specific item, you can shred credit card statements after

45 days. As with the bank statements, hang on to those statements that you may need for your taxes, as proof of purchase or for insurance. Tax returns/supporting documents: Despite being able to amend your tax returns going back three years, the IRS has seven years to audit your returns if the agency suspects you made a mistake, and up to six years if you likely underreported your gross income by 25 percent or more. As a result, you need to hold on to your returns and all supporting documents for seven years. Retirement account statements (including 401(k), 403(b), 457, IRA, Roth IRA, SIMPLE, PSP and Keogh): Keep notices of any portfolio changes you make intra-month (or intra-quarter for some plans) until the subsequent state-

ment arrives to confirm those changes. After making sure the statement is correct, you can shred away. One note: keep evidence of IRA contributions until you withdraw the money. Brokerage and mutual fund account monthly statements/periodic trade confirmations (taxable accounts): Retain confirmations until the transaction is detailed in your monthly report. For tax purposes, flag a month where a transaction occurs because you may need to access this information in the future. Otherwise, shred monthly statements as new ones arrive, but keep annual statements until the sale of each asset within the account occurs and for seven years thereafter, in case you get audited.

Social Security

benefits after your FRA, your retirement benefits increase 8 percent a year up to age 70. Either spouse can elect spousal benefits and postpone filing for retirement benefits based on their work record until age 70 in order to obtain higher monthly benefits then. A widow can apply for widow’s benefits at age 60, and then apply for her own retirement benefits later. There is no penalty for claiming widow’s benefits. If you marry before you are 60, you can still get widow’s benefits even if that marriage ends. Even if you are not close to any of the eligibility dates, it pays to plan in advance. If you wait to collect the relevant data, you may make a decision in haste that can cost you thousands of dollars. Do your homework in advance. For most retirees, Social Security income will be a major factor affecting your lifestyle. © 2013 Elliot Raphaelson. Distributed by Tribune Media Services, Inc.

From page 22 them. For example, disabled widows or widowers can begin claiming benefits at 50, or at 60 if they are a widow or widower surviving a divorced spouse. If you apply for retirement benefits at age 62, your benefits typically will be less than what you would receive at FRA. However, if you qualify for disability benefits, you will not be penalized even if you receive benefits before your FRA. Accordingly, you should file for retirement and disability if you have health problems. A spouse cannot claim spousal benefits if the husband (or wife) has not applied for retirement benefits. However, to get around this restriction, one could apply for and suspend benefits upon reaching FRA. Then the spouse can apply for spousal benefits. If you can afford to postpone retirement

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October 2013 Baltimore Beacon Edition  

October 2013 Baltimore Beacon Edition

October 2013 Baltimore Beacon Edition  

October 2013 Baltimore Beacon Edition