Can SharePoint automatically archive files before deleting them?

You can use Power Automate to move files based on a date condition, then apply a separate cleanup process to the archive. However, be careful about using the Modified date as a substitute for inactivity: metadata changes can reset it, and it still will not tell you whether an old reference file is genuinely unused. Disposition review can provide approval before deletion, but it does not move the files for you.

A practical approach is to create a separate reference site or archive library, move the long-term reference material there, and exclude that location from the deletion policy. That lets you apply more aggressive retention rules to ordinary working content without risking the historical media.

File-level archiving is becoming available through Microsoft 365 Archive and SharePoint Advanced Management, rather than only archiving entire sites. Archived files are placed in colder storage and may take roughly 24–72 hours to become accessible again after someone requests them, so it is better suited to rarely used content.

A warning before deletion is available through disposition review on retention labels. At the end of the retention period, the item is queued for review and the designated people are notified instead of it being deleted immediately.

The more important issue is the age signal. Retention generally uses the last modified date, which could incorrectly target old but still-useful reference files. If you need to identify content based on access activity, look into SharePoint Advanced Management and its data access governance reports. Microsoft 365 Archive may also help reduce active storage, though archived storage and rehydration can have costs and delays.