Data Retention Policy Explained: A Comprehensive Overview

Key Takeaways

• A data retention policy defines how long your organization stores each type of data and how you dispose of it when the retention period ends.
• State and industry regulations (HIPAA, SOX, FINRA, GDPR, FOIA) mandate specific retention periods, and non-compliance can result in fines, sanctions, or criminal liability.
• A strong policy covers data classification, retention schedules, disposal procedures, legal hold protocols, roles, and review cadence.
• Common retention failures stem from inconsistent enforcement, excluded backup data, shadow IT and misalignment between Legal and IT teams.
• Automating retention through an archiving solution reduces manual errors and creates the audit trail you need to prove compliance.

Most organizations retain far more data than they need, and far less than regulators require.

That gap is where fines, failed audits and litigation exposure live. A data retention policy closes that gap by defining what your organization keeps, for how long and how you dispose of it when the retention period ends.

In this guide, you’ll learn:

• What a data retention policy is and what it should include
• Which regulations set specific retention requirements
• How to build a retention policy step by step
• Common reasons retention policies fail and how to avoid them
• What to look for in a solution that automates retention enforcement

What Is Data Retention?

Data retention is the practice of storing specific types of data for a defined period, then disposing of it according to a documented schedule.

The retention period is set by a combination of regulatory mandates, industry standards and your organization’s own operational needs.

Once the period expires, the data should be securely deleted, unless it’s under legal hold.

What Is a Data Retention Policy?

A data retention policy is a set of rules governing how long an organization stores different types of data for compliance and regulatory purposes and how they will dispose of it when it is no longer needed.

Every data retention policy typically has these 7 elements

• Data identification — Specifies the types of data that need to be collected and stored.
• Storage methods — Detail how and where the data will be securely stored.
• Data formats — Standardize the formats in which data will be maintained.
• Retention periods — Define how long each type of data will be retained.
• Disposal procedures — Outline secure methods for erasing or destroying data at the end of its lifecycle.
• Backup and archiving — Establish procedures for creating redundant copies and long-term retention of data.
• Roles and responsibilities — Ensure policy is enforced by assigning clear roles, permissions, and access controls to staff members.

The primary goal of a data retention policy is to ensure effective data management in line with applicable laws and regulations.

An organization can have multiple data retention policies for different types of data and situations.

Data retention policies can be bypassed if specific data is evidence in a legal case. This is when retained data can be put on legal hold for prolonged periods.

What is a data deletion policy?

A data deletion policy defines how and when data can be securely removed once it’s no longer needed. It complements the retention policy by ensuring that expired data is deleted in a way that prevents unauthorized access or recovery.

To make deletion defensible, organizations should be able to prove through audit logs that data was deleted on schedule across all storage locations, including backups and cloud services. Incomplete deletion, like removing data from production systems while leaving copies elsewhere, s a common audit finding.

Having a data deletion policy matters because it

• Prevents legal penalties for over-retention
• Reduces the risk of data breaches
• Lowers storage and maintenance costs
• Simplifies legal audits and ediscovery

What to include:

• Triggers — Events that prompt deletion (e.g., end of retention period)
• Methods — Secure wiping, shredding, or encryption-based deletion
• Scope — Covers all data systems (cloud, on-premises, backups)
• Responsibilities — Assign roles for enforcement and oversight
• Verification — Keep logs and audits to confirm deletion

Automating deletion through your archiving system ensures consistent compliance and minimizes manual errors.

What is a data retention period?

A data retention period is the length of time that specific types of data are kept or maintained before being deleted or archived.

The length is set by legal, regulatory, and business needs, so the data stays available long enough to satisfy whatever your retention policy requires. After the retention period expires, the data is either securely disposed of or archived, depending on the organization’s policies.

Data should only be retained for as long as it’s useful, and depending on certain laws governing how long it must be kept.

Some data can be kept for longer periods of time if needed by the business and allowed for by data protection laws.

What type of data is included in retention policies?

The type of data being stored and included in the retention policy is different for every organization.

There are laws governing which type of data must be retained, but most of it is in the hands of the business policy.

Common data being retained includes:

• Employee records — Personal information, employment history, performance reviews, and payroll data.
• Financial records — Accounting documents, invoices, receipts, tax filings, and financial statements.
• Customer data — Contact information, purchase history, communication records, and support tickets.
• Email and communication logs — Emails, instant messages, and other forms of business communications.
• Legal documents — Contracts, agreements, litigation records, and compliance documents.
• Operational data — Reports, logs, project documentation, and internal communications.
• Healthcare records — Patient information, medical histories, treatment records, and billing information (relevant to healthcare organizations).
• Educational records — Student information, grades, attendance records, and correspondence (relevant to educational institutions).
• Government records — Public records, permits, licenses, and regulatory documents (relevant to government agencies).
• Research data — Study results, data sets, and experimental records (relevant for research institutions).
• Audit and compliance records — Documentation related to audits, inspections, and compliance checks.
• Sales and marketing data — Campaign data, sales metrics, customer feedback, and market analysis.
• IT and system logs — System logs, security logs, and backup data.
• Intellectual property — Patents, trademarks, copyrights, and trade secrets.

Data Retention vs. Archiving vs. Backup vs. Deletion

These terms are often used interchangeably, but they serve different purposes in a compliance program.

Retention defines how long data must be kept, archiving moves data into long-term storage for retrieval, backup creates copies for disaster recovery, and deletion removes data when it’s no longer needed.

For a deeper look at storage strategy, see backup vs. archive and pair it with the data deletion policy defined above.

Why Do You Need a Data Retention Policy?

The main reason any business needs a data retention policy is compliance with local, state, and federal laws.

These laws govern how long data must be retained and when your business must delete it from its systems.

Non-compliance can result in six- and seven-figure fines, litigation sanctions, and in some cases (SOX, for example) criminal liability for individuals.

Data retention policies give you an easy way to manage this data retention period.

Besides legal compliance, data retention policies help you with:

• Data security — Protect sensitive information by specifying secure data storage and disposal, reducing the risk of data breaches.
• Efficiency — Optimize data storage resources and reduce costs with unnecessary data storage.
• Litigation and audits — Ensure relevant data is available and properly retained for legal actions.
• Business needs — Support business operations by ensuring necessary data is readily available for analysis, decisions, and support.
• Privacy — Demonstrate commitment to data privacy by managing personal data.
• Data lifecycle management — Establish a clear process for data backups, archiving, and retention, improving data management.

Organizations must establish and execute data retention compliance to meet these and other business objectives.

Control your data retention policies for compliance.

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Data Retention Laws

Despite the operational benefits of enacting data retention policies, their greatest importance comes from the need to avoid violating specific data retention laws.

Many laws and regulations include precise wording about records management, such as what data must be preserved and for how long.

Failure to follow these guidelines might result in financial, civil, or even criminal repercussions for your company.

Here’s a list of specific laws and regulations with their data retention requirements to give you a better idea of the function data retention plays in compliance:

• General Data Protection Regulation (GDPR) — Data must be kept in a form that allows identification of data subjects for no longer than is required for the purposes for which the personal data are processed.
• Health Insurance Portability and Accountability Act (HIPAA) — requires covered entities to retain administrative and compliance-related documents for a minimum of six years from the date of creation or the date they were last in effect, whichever is later. Medical record retention periods are governed by state law, not HIPAA’s Privacy Rule.
• The Fair Labor Standards Act (FLSA) — Businesses must keep records for at least three years. Time cards, work schedules, and recordings of changes in wages must be retained for two years in order to compute compensation. All records must be easily accessible to Department of Labor agents for examination.
• Sarbanes-Oxley Act (SOX) — Accountants who conduct audits shall retain all audit or review relevant data for five years from the end of the fiscal period in which the audit or review was concluded. Relevant data include memoranda, letters, communications, electronic records, and other documents generated, sent, or received in conjunction with an audit or review. Any public business that violates SOX data retention standards faces penalties, jail, or both.
• Family Educational Rights and Privacy Act (FERPA) — Governs the retention and privacy of student education records in U.S. schools that receive federal funding. FERPA does not mandate specific retention periods. Retention timelines are set by state law and vary significantly. Institutions must ensure secure storage, access controls, and proper destruction of records when no longer needed.
• Financial Industry Regulatory Authority (FINRA) Rule 4511 — Requires broker-dealers to retain books and records for at least six years, depending on the record type. Communications such as emails, instant messages, and trade confirmations must be archived using WORM-compliant technology. Firms must also maintain an easily accessible format to support audits and investigations.
• Securities and Exchange Commission (SEC) Rule 17a-4 — Requires broker-dealers to store certain records in a non-rewriteable, non-erasable format. Retention periods vary from three to six years, depending on the data type. Some documents must be preserved for the life of the firm. Applies to electronic records, including email and trade communications.
• Freedom of Information Act (FOIA) and State Public Records Laws — Applies to federal, state, and local government agencies. Agencies must retain public records for specific periods to fulfill public records requests. Retention requirements vary by state and record type, but typically range from 2 to 10 years. Records include emails, reports, permits, licenses, contracts, and more. Failure to maintain accessible records may result in fines or legal challenges.
• California Consumer Privacy Act / California Privacy Rights Act (CCPA / CPRA) — Requires businesses to disclose how long they retain personal data and why. Consumers have the right to request deletion of their personal information unless retention is required to comply with legal obligations. Applies to for-profit entities doing business in California and meeting specific revenue or data volume thresholds.
• Gramm-Leach-Bliley Act (GLBA) — Requires financial institutions to protect consumer information and have a written data retention and disposal policy. While GLBA doesn’t specify retention timelines, it obligates companies to maintain customer records for as long as necessary for business or legal reasons and securely dispose of them once no longer needed.

Data retention requirements by laws

Common Reasons Data Retention Policies Fail

Most retention policies fail not because they were poorly written, but because the organization never built the operational discipline to apply them consistently.

Inconsistent enforcement across departments

Policies often look strong on paper but break down when teams follow different retention practices. That inconsistency creates gaps in compliance and makes it harder to prove the policy was applied uniformly.

Backup data excluded from retention schedules

Organizations sometimes apply retention rules to production systems but ignore backup copies. The result is over-retention, incomplete deletion, and audit exposure when old data remains recoverable.

Shadow IT and unsanctioned communication channels

Employees may use personal email, messaging apps, or unapproved tools for business communication. If those channels aren’t captured, the organization may miss records it is legally required to retain.

Misalignment between Legal, IT and Records Management teams

Legal may define retention requirements without IT knowing how to enforce them, or IT may automate deletion without understanding legal hold obligations. That disconnect can lead to premature deletion or unnecessary data sprawl.

Static policies that aren’t updated when regulations change

A retention policy should evolve when laws, business operations, or communication channels change. If it stays static, the organization can quickly fall out of step with current compliance requirements.

No audit trail to prove compliant deletion

Deleting data is not enough if you can’t show when and how it was deleted. Without a defensible audit trail, organizations may struggle to prove compliance during investigations, audits, or litigation.

How to Create a Data Retention Strategy

A solid retention strategy comes down to knowing what data you hold, which rules apply to it, and who is responsible for acting on them.

Assemble a cross-functional team

Start by identifying the stakeholders who should contribute to the policy. This team should typically include Legal, IT, administration, records management, and business leaders so the policy reflects regulatory requirements, technical realities, and what you need operationally.

Who owns what: roles in retention policy enforcement

• Legal/Compliance — Identifies regulatory requirements, manages legal holds, and reviews the policy on a regular basis.
• IT/Infrastructure — Implements archiving tools, manages storage, and executes automated retention and deletion rules.
• Records Management — Classifies data types, maintains retention schedules, and supports audits.
• Department Heads — Enforce the policy within their teams and flag exceptions or operational needs.
• Executive Sponsor — Approves the policy, allocates budget, and signs off on major policy changes.

Inventory and classify your data

Next, you want to sort data into categories based on what your organization is working with while determining which data types need their own retention rules. Common categories might include sales documents, customer information, employee records, payroll data, contracts, and operational communications.

Map each data type to applicable regulations

Determine the regulations and laws that apply to your company based on the kind of data you store, your location, your industry, and other factors. Start by identifying your industry and jurisdictions, then cross-reference those obligations against the types of data your organization collects and stores.

Define retention periods and trigger dates

For each data category, decide how long the data should be retained and when the retention clock starts. Some schedules begin at creation, while others begin when an employee leaves, a contract ends, or an audit period closes.

Document enforcement, deletion, and legal hold procedures

Choose which data will be archived (and for how long) and which will be removed when the retention period expires. Then create a strategy for enforcing the policy through automated retention rules, secure deletion workflows, legal hold procedures, and scheduled audits in your archiving system.

Communicate, implement, and review the policy

Inform all impacted employees and teams about the policy, then implement it across the organization. Revise and improve the policy on a regular basis by analyzing new regulation changes and how the policy is affecting your business.

Remember that every organization is different, and your data retention policy creation process might look different, but having a process in place will help you develop the best policy for your unique needs.

Data Retention Best Practices

When creating your data retention policy, keep in mind these best practices:

• Prioritize research — Start by thoroughly researching relevant legislation and legal requirements that affect your organization. It’s also important to future-proof your policy.
• Make it simple — Use plain language in your policy for clarity and make it more employee-friendly. Begin with a straightforward approach and make adjustments when needed.
• Customize policies — Create specific policies for different data types while taking business necessity and legal requirements for retention periods into account.
• Be transparent — Inform customers, subscribers, and users about your data-handling practices, granting them control over their data whenever possible.
• Backup and archive — Invest in a reliable data archiving solution that can automate data archiving and retention policies, enhancing efficiency and security. Look for a system that aligns with your business needs and offers robust search capabilities.
• Perform regular backups — Regular backups protect against legal liabilities and minimize data loss risks during outages or unplanned downtime.
• Optimize data retention — Avoid storing data longer than necessary to prevent data bloat and enhance the security of your organization.

Data Retention Policy Examples

If you’re still not sure where to start, take a look at these data retention policy examples from well-known companies and use them as inspiration for developing your own data retention policy template:

• Google
• Microsoft
• Apple
• Instagram
• Netflix
• Spotify

What to Look for in a Data Retention Solution

• Automated retention policy enforcement across all data types — The system should apply policies consistently across email, chat, social media, mobile, and file data. Manual enforcement doesn’t scale and often creates gaps between systems.
• Granular search and retrieval for ediscovery and audits — Fast, precise search helps teams respond to investigations, public records requests, and compliance reviews without reviewing unnecessary data. It also reduces the time needed to locate relevant records.
• Legal hold capability — A solution should let you suspend scheduled deletion when data becomes relevant to litigation or an investigation. That protects evidence and reduces the risk of accidental spoliation.
• Audit trail and tamper-proof logging — You need defensible records that show when data was captured, accessed, retained, placed on hold, and deleted. Detailed logs help prove compliance during audits and legal review.
• Compliance with WORM requirements where applicable — Some regulations require non-rewriteable, non-erasable storage for specific records. If your organization falls under FINRA or SEC rules, this capability is essential.
• Deployment flexibility — Some organizations prefer cloud, while others need on-premises or hybrid deployment for data sovereignty or operational reasons. Choose a platform that matches your security, infrastructure, and compliance requirements.

Make Data Retention Easy with Jatheon

Building the policy is one thing. Enforcing it consistently across all your communication systems is where most organizations struggle.

Jatheon’s cloud archiving solution automates retention policy enforcement by applying your custom retention rules to every type of communications data.

When a retention period expires, the system handles deletion automatically. If data needs to be preserved for litigation, the legal hold feature overrides the scheduled deletion and keeps the data intact until the hold is released.

Jatheon archives your email, social media, mobile communication, collaboration apps, and files in one place to support compliance, audits, and investigations.

Summary of the Main Points

• Data retention involves storing data for a specific period, necessary for compliance with industry laws and regulations.
• A data retention policy is a set of rules on how long data should be stored and how it should be disposed of. It’s crucial for ensuring legal compliance and avoiding fines.
• You can have multiple data retention policies in place for different data types.
• Besides allowing your organization to stay compliant, data retention policies enhance data security, efficiency, privacy, and overall data lifecycle management.
• Key elements of such a policy include data identification, storage methods, data formats, retention periods, disposal procedures, backup and archiving, and roles and responsibilities.
• Policies help avoid violations of data compliance laws, such as those stipulated by GDPR, HIPAA, FLSA, and SOX.
• To automate your data retention, it’s best to implement an archiving solution that automatically applies custom data retention policies to every new piece of archived data.

FAQ

Does GDPR have a data retention policy?

The GDPR doesn’t have a set timeframe for how long data needs to be kept. Organizations need to determine their own data retention timeframe, but the GDPR requires them to clearly outline the retention period before the data is collected.

How long should different types of data be retained?

Retention periods depend on the data type, the regulation that applies to it, and your business needs. Payroll records, audit documents, customer communications, student records, and public records can all have different schedules, so your policy should map each category to a defined retention period and trigger date.

What is the most common backup retention policy?

One of the most common backup retention policies is the Grandfather-Father-Son (GFS) method. It involves retaining multiple backup copies for different retention periods. These periods include daily (Son), weekly (Father), and monthly (Grandfather). The other most commonly used method is the “3-2-1 method,” meaning “maintain 3 copies, store copies on 2 different types of storage media, keep 1 copy on an off-site location.”

What are some common data retention policy issues?

Data retention bolsters many challenges, such as adjusting your policy to different legal regulations, setting a data retention schedule that will prevent data over-retention and under-retention, keeping your retention policy flexible for different types of data and their legal reasons, updating your policies with technological advancements, and creating a policy that is optimized with your organization’s budget.

How often should a data retention policy be reviewed and updated?

Data retention policies should be reviewed regularly, ideally once a year, to ensure they remain compliant with changing laws and business needs. Reviews should also occur when new legislation emerges or business operations change significantly.

What are the potential risks of not having a data retention policy?

Risks include legal penalties, increased vulnerability to data breaches, inefficient storage costs, difficulties in legal discovery, and damage to the organization’s reputation due to data mishandling.

What happens if you don’t have a data retention policy?

Without a data retention policy, organizations often keep data indefinitely or delete it inconsistently. That increases legal exposure, storage costs, audit risk, and the chances of failing to preserve or delete records when regulations require it.

About the Author

Natasa Djalovic

Natasa Djalovic is a Senior Content Writer at Jatheon, with 10+ years of experience in creating B2B and SaaS content, with a strong focus on compliance, archiving, and tech topics. Outside of work, she likes to collect and build LEGO sets, hang out with her cats, and watch documentaries.