Yesterday, our take-away lesson was that only one-twelfth of the clothes and textiles in your house are useful or interesting to anyone in your family, so you should clean your stuff out early and often. Today, we're talking papers.
Lesson two: You need to keep almost none of the paper that you're keeping. This means on paper but also electronically. Get rid of it!
In my lawyering work, I regularly counsel non-profit organizations on corporate governance. A big part of that work involves preparing and implementing policies about retaining and shredding operational documents. Documents range from innocuous everyday correspondence to incorporation paperwork, employee records, property records, leases, applications for grants, and so on. There are generally accepted practices for handling just about every scrap of paper that enters a non-profit's office, and my job is to facilitate proper handling.
You're not a non-profit organization, and I'm not your lawyer. But here's a general guide for what to do with the paper that comes into your home.
Your overall strategy should be to touch paper only once. Bring your mail in and sort it immediately. Toss the junk mail. Open bills, toss the inserts, and file the bill and return envelope for paying. If you get paper confirmations of online payments or check deposits, open and file immediately, or consider opting for e-mail confirmations instead. Set magazines wherever it is you'll sit and read them. Put the doctor's appointment reminder postcard next to your computer, phone, or calendar. Designate a spot for merchandise catalogs and clear them out as quickly as they pour in.
Make a date with yourself quarterly or biannually to get rid of the accumulated magazines and catalogs. You can always find a back copy of a magazine at your library or on the magazine's website, and it's not your job to be the magazine's archivist.
As for the "document retention and destruction" end of paper management, I was going to type up a huge list of the types of papers you will likely encounter, and a chart telling you how long to keep them before throwing them out. But it turns out that there are plenty of other guides online, including one by the entity that can audit you when your taxes don't look right. This "Managing Household Records" page is very good . I like it because, essentially, the only time you can go to jail for not handling paper correctly is when you mess with the IRS. So a guide from the horse's mouth, so to speak, is going to be reliable and complete for most people's purposes.
On to the nitty gritty. A huge category of papers we had to handle at the deceased elderly aunt's house last weekend was monthly statements. We saw statements from bank accounts, health insurance, life insurance, homeowners insurance, vehicle insurance, phone bills, utility providers, credit card issuers, and so on. Really, every entity under the sun that would send a monthly or quarterly statement to the elderly aunt, she would keep the paper. For years. For decades. We found canceled checks from 1971, township tax assessments from 1981, long-distance phone bills from 1991, investment statements from 2001, and hospital bills from 2011. She had retained paperwork that she should have discarded as soon as her checking account reconciled with the bill payment -- in other words, she kept paper for 40 years that she could have ditched after 40 days.
Six copier-paper boxes' worth of it!
Don't get me wrong. There are things you should keep forever, and things you should keep a few years. The usa.gov page there includes a handy chart. Most usefully, in my opinion, is the entry for your filed income taxes and associated paperwork. Keep them for 7 years after filing -- this has to do with your risks of being audited, and how far back you can file amended returns. But it's just 7 years!
The oldest tax return we found at elderly aunt's house was filed in 1965. That's some scary math.
Finally, a note about scanning and going so-called paperless. OK, so you've scanned in the incoming paper and shredded it. Now you have an image or a PDF of the paper and you have to put it somewhere. Disk space is super cheap, and you get a lot of free space on various cloud computing storage services and gmail. But you still need to manage this garbage so that you don't have the electronic equivalent of an overflowing file cabinet. Name the file folders intelligently, and calendar time for yourself, regularly, to go in and delete the outdated files. You don't need 5-year-old paper credit card statements; and you don't need 5-year-old electronic statements, either.
Get rid of it! Your groaning file cabinets (or filesystems) will thank you for it.
 Ignore the broken PDF link; though I found a good copy here (PDF), I think it's overkill and may be overwhelming for someone initially attacking a clutter problem.