Seniors: Advice To Shred Is Wrong

Nearly anytime there is a free shredding event, seniors are encouraged to destroy all documents that might be used as a source of identity theft. Experts in various fields keep telling seniors that they need to shred, shred, shred. But they are wrong, wrong, wrong.

Some experts encourage you to destroy cancelled checks that have nothing to do with taxes, after you’ve reconciled them with your bank statements. Well, the IRS may not need those documents, but they may be important for other reasons. The typical Medicaid application for nursing home coverage requires copies of financial statements, including images of checks of the applicant and the applicant’s spouse, going back up to five years.

While the Medicaid application does not have all of the statements, including the statements of closed accounts, the family may have to purchase them from the financial institutions. Those unnecessary costs can total several hundred dollars. Furthermore, in the age of bank mergers, they’re not always easy to obtain.

A simple system for records retention is to purchase 10- by 13-inch envelopes. Mark the year and month on each large envelope and place all the receipts and bank statements for one month in that envelope. It will likely take less space than you think. There are software programs available which scan and make images of all your receipts. Although we have them, we never use them in our office because it’s simpler to place receipts in an envelope. Five years of envelopes rarely fill more than one filing cabinet drawer.

If you have any other ideas for organizing financial records, let us know in the comments below.

Stay well until the next post.

Bob Gasparro