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Retirement, Investments, & Insurance for Individuals Build your knowledge Should
you digitize your financial documents?
Should you digitize your financial documents?

When it comes to securing your financial details, a mix of digital files and
paper copies can help you boost document protection for important records.


3 min read | August 02, 2023

More and more people are opting to store financial records digitally, from
scanning important receipts and storing them on a home computer to accessing
statements through electronic records only.

The potential for less paper and the possible pitfalls of cybertheft may make
you both eager and wary about storing your financial records online.

Luckily, there are clear options for managing documents and ensuring you have
what you need to track your retirement savings, safeguard your financial
transactions, and access your estate plan.

These rules of thumb can help you decide when to digitize documents and when to
keep paper copies.


INVESTMENT, RETIREMENT, AND BANKING RECORDS

One way to think about managing documents, both paper and digital, is whether
the institution providing them has safer storage than you do. “A financial
firm’s technology and security procedures are usually going to be a lot better
than your personal computer,” says Stanley Poorman, a financial professional
with Principal®.

In addition, most statements are permanently part of your account, which you can
access through an app or online. “They’re a perfect example of something you
don’t have to worry about storing and a way you can stop wasting paper,” Poorman
says.

Digital or paper? Digital, and you don’t even need to keep a copy on your home
computer. However, leave instructions in your estate plan (see below) on how to
access should the need arise.


RECEIPTS

Many people no longer itemize deductions, which in turn impacts the need to keep
any receipts—even digital versions. “A lot of the time you won’t even get close
to itemizing on your return,” Poorman says.

Digital or paper? Maybe neither. Once you’ve confirmed that transactions match
your financial statements, you can toss them. If you’re in doubt, take a photo
of or scan the receipt—but check that there’s no personal information such as a
credit card number.


TAX RECORDS

Whether or not you should keep a digital or paper copy of tax returns depends.
“I prepare my own taxes using an online service, and it saves all my previous
returns,” Poorman says. “So it’s more of a personal preference. I print them out
because I like paper for some things, but a service may save copies for you.”

A local tax preparer may still rely on paper, but the push to e-file could just
as likely mean you’re signing (and they’re storing) returns digitally. If so,
ask how they’re securing those files. “Why would you take up personal data
storage to house something that is housed somewhere else more securely?” Poorman
says.

If you’re prepping your returns by yourself, store them digitally or with a hard
copy for seven years, and keep them easily accessible. Digital storage should be
with a two-factor authenticated, password-protected network and computer to
deter cyberthieves, or a flash drive with built-in encryption that’s securely
stored (i.e., not in a junk drawer).

Digital or paper? Depends on your method of preparation; if digital, provide
access instructions in your estate plan.


ESTATE PLAN

Unlike other important financial records, the legal documents that make up an
estate plan must typically be in paper form. “States each have their own
requirements for witnesses, notarizing, and even the color of ink,” Poorman
says. While you can keep a digital copy, “you can never get rid of the
originals,” he says.

If you’re assembling an estate plan folder, consider including a list that
documents all those digitized investment and bank accounts, including account
name, number, contact information, and beneficiary. (This estate planning
workbook (PDF) can get you started.) “Beneficiary information is hard to find
when it’s digitized,” Poorman says.

Digital or paper? Keep the originals of all estate plan documents. If you
digitize certain elements, such as a beneficiary list, provide a way for trusted
people to access.


NEXT STEPS

 * Have you updated your beneficiaries? Log in to your Principal account to
   review this key information and check your retirement savings progress. First
   time logging in? Create an account.

Financial planning
Estate planning
Taxes


--------------------------------------------------------------------------------

The subject matter in this communication is educational only and provided with
the understanding that Principal® is not rendering legal, accounting, investment
or tax advice. You should consult with appropriate counsel, financial
professionals or other advisors on all matters pertaining to legal, tax,
investment or accounting obligations and requirements.

Investment advisory products offered through Principal Advised Services, LLC.
Principal Advised Services is a member of the Principal Financial Group®, Des
Moines, IA 50392.

2048278-022022

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