The U.S. has been trending toward smaller families for generations, but the problem is becoming more acute. Population growth is a significant driver of economic growth, so when families have less children, it creates a negative cycle. Developed countries generally have lower birth rates than developing countries, but other factors are pushing Americans toward smaller families.

Not unsurprisingly, the economy is a major driver for falling birthrates. With the Great Recession hitting recent immigrants particularly hard, some of the traditional forces supporting a replacement birthrate are under the same pressure as the rest of the population.

A declining birthrate and an aging population both point to a weak U.S. economy over the long haul. This may be a situation, unfortunately, where we can look to Europe and Japan as examples of where the U.S. may be in 10, 15 or 20 years. It’s not a pretty picture.

As the financial burden on workers increases, it becomes more and more difficult to meet the growing health care costs of the country’s seniors, further weighing down the economy and discouraging larger families.

What does this mean for the average investor? It’s time to throw away our assumptions about U.S. economy, social security and the stock market as the lynchpin of our retirement savings. We all must look at a wider variety of choices to ensure income and stability in our golden years.

For example, one of my clients, at the time when many choose to downsize their home, decided to move into a larger house in need of renovations. How could this possibly make sense for them? The needs of this sandwich generation family made this not only a necessary move, but a smart one.

The couple, both in their 60s, was ready to have an aging parent with dementia move in with them. At the same time, the couple’s only son and his wife were ready to buy a house, but didn’t have the cash for a down payment. The solution? Three generations moved in together.

This necessitated buying a house that was both accessible and large enough for everyone’s needs. The baby boomers covered the down payment and renovation costs while their son and his wife pay the mortgage and utilities.

Over the longer term, once the grandparent passes away, the plan is for the parents to move into the in-law suite, which has a separate entrance and kitchen, and for the house to eventually pass to the kids.

It might not be your vision of the perfect retirement, and it certainly wouldn’t work for everyone, but it saves money for all involved, shares the burden of caring for the grandparent and allows the boomer couple to retire without having to worry about a mortgage. While the solution may seem unorthodox, it works for this family, and I hope you’ll use it to broaden your horizons when thinking about solutions for your retirement.

There’s no way to sugar coat it: We’ve been through a rough time. January 2012 brought an end to the worst five years of economic growth since 1928-1932—the beginning of the Great Depression:

• There are three million fewer Americans employed today than there were in January of 2008.
• From 2007-2011, the average net worth of all American households fell by nearly 40%.
• Real household income fell by more than $4,000 from $54,489 in Dec. 2007 to just $50,054 by January 2012.

While the stock market’s recent resurgence is encouraging, the numbers mentioned above keep me from being too optimistic about where we’re headed over the long term. In particular, it makes me question the wisdom of both our reliance on stocks as a long-term investment tool as well as the assumption that social security benefits will be there for us in 10, 20 or 30 years.

Many families—particularly those closer to retirement that can’t afford more losses—should look at alternatives such as annuities to ensure their economic security.

This could be a sign that interest rates will be jumping soon. If and when that happens, bonds will shift from being a secure investment to a liability. As I’ve described on this blog before, those who are left holding them after rates rise will not enjoy the results.

As the economy recovers and other investments look more attractive, bonds will cease to be the safety investment of choice. For those who have moved into this market, it means they will be left holding an investment that no one wants—and one that will lose its value. This potential shift makes it a good time to check with your advisor to ensure that you’re protected.

For years, our federal government has denied the fact that we have a spending problem. Now, the sequester—the technical term for the mutually destructive $85 billion of across-the-board budgets cuts the parties negotiated last year—will make significant cuts, but in a way that could shatter the fragile economic recovery. Politicians from both parties are talking about solutions, but seem to be far apart with no intention of moving to the middle.

For investors, this means that, while they might not see an impact on March 1, the economy will feel a long-term impact. This is on top of many other recent federal spending cuts and the January payroll tax hike—all will contribute to a slower economy and a weak stock market.

This continued uncertainty about the recovery should, at minimum, force investors to look at a broad range of options beyond the traditional stocks and mutual funds. I’ve already shared some of my reservations with the bond market, but would recommend annuities and other guaranteed income options as better choices for many families.

In-service distribution, or an in-service withdrawal, is a feature found in many plans that grants additional investment flexibility by enabling account holders to withdraw funds early and roll them into an IRA. For many accounts, the magic age at which that becomes possible is 59½, but some accounts allow you to have access even earlier—there are some that allowed account-holders to access more than half of their money at age 55.

The benefits of utilizing an in-service distribution strategy can be significant. At a time when the markets have been volatile and the only certainty is uncertainty, investing some of those rolled-over funds in a more conservative manner and diversifying your portfolio makes a lot of sense. It is always important to review any actions carefully and discuss any withdrawals with a trusted advisor, as certain withdrawals can impact future contribution limits, and there are circumstances where a failure to distribute company stock in a 401(k) might expose you to additional taxes.

The bottom line, however, is that using an in-service distribution to roll funds into an IRA provides you with a wider range of investment options and greater control of your financial future—and for those investors that take the time to understand the financial landscape, and move forward with counsel of a trusted financial adviser, that is never a bad thing.

In my experience, one of the most common financial misconceptions has to do with how much you have give away each year without incurring a tax penalty. In 2012, the annual gift limit was $13,000. As part of the agreement that was reached to settle the fiscal cliff debate, the new annual gift limit is now $14,000. Specifically, I speak with clients all the time who are under the impression that the annual gift limit represents a hard-and-fast rule whereby any amount of a financial gift over that limit is subject to taxation. The reality is that you can give away virtually any amount you like, you simply have to report it to the government.

The only tax “penalty” that you incur for doing so has to do with your lifetime basic exclusion amount, a number that is the same as the estate tax exemption ($5.25 million in 2013). So you can see that the instances where this would be a significant problem are rare. Looking at the math shows how even a very large financial gift of, say, $100,000, would only take that lifetime exclusion down to $5,164,000 (the number you get from taking the $86,000 that is over the $14,000 annual limit and subtracting it from $5.25 million). People tend to spend a lot of time worrying about these numbers, but the reality is that unless you routinely give extremely large amounts of money, there is very little reason to think that this will be an issue for you.

To illustrate that point, I’m going to share an article I came across recently—an article that I found so compelling that I made it the centerpiece of one of my recent radio shows. The article, an excerpt of which can be found here, appeared in Fortune Magazine in August of 2000, and predicted 10 stocks to “last the decade”. You can see where this is going, right? As was pointed out in the article summary, far from being a list of decade-long winners, this is a portfolio of stinkers. The article endorsed companies like ENRON, Viacom, Univision, and included three bankruptcies and a bailout, without a single winner in the bunch. Anyone who followed the advice of this article would have lost 70% of their portfolio’s value.

Apart from the humor in this, there are some very real lessons to be learned. It’s worth remembering to look beyond the hot stock picks and embrace proven, successful and stable long-term investment strategies as well as products like annuities that take a largely risk-free approach. If even the experts and the best in the business can get it this wrong, we all need to proceed with caution when it comes to the latest and greatest financial forecasts.

Despite a hike in the top federal estate tax rate from 35% to 40%, the amount of the exemption was boosted permanently to $5 million and adjusted annually for inflation. In 2013, that equates to a $5.25 million exemption. If Congress and the President had failed to address the estate tax issue, the exemption would have dropped to $1 million, and it would have lost its portability—a provision that allows the unused portion of an estate tax exmption to pass to a surviving spouse. This essentially doubles the exemption limit in many cases.

Standard deductions also went up: Married couples can now claim a $12,200 deduction. That number increase to $13,400 if one spouse is 65 or older, and $14,600 is both spouses are over the age of 65. In 2013, 401(k) annual contribution limits are also up, increasing to $17,500 for those under the age of 50, and $23,000 for the over 50 crowd. Even IRA contribution limits have increased $500, up to $5,500 now, with a $1,000 annual catch-up bonus for those over the age of 50.

The bottom line is that it’s a mixed bag, with tax and savings changes both positive and negative for your finances, and it makes sense to plan for the future with your financial advisor.

Everyone will still see less money in their paychecks as a result of the social security payroll tax rollback. This increase (from 4.2% to 6.2%) is not really a tax hike, per se: it just gets rid of the temporary reduction that was intended to serve as a modest piece of fiscal stimulus. In fact, no matter how much we all like seeing more take-home pay on our paychecks, there are some who would argue that the tax break—which was implemented two years ago—shouldn’t have happened in the first place.

The wide range of changes means that the definition of “high-income earner” shifts depending on which aspect of the tax code you focus on. The agreement, for example, resulted in an upper-income tax bracket cut-off of $400,000 (and $450,000 for married couples filing jointly), with the top marginal tax rate going from 35% to 39.6%. Capital gains taxes also went up to 20% for this income bracket.

Different income cut-offs apply, however, for the new Medicare tax increases under Obamacare. Obamacare tax increases consist of two different elements: one is a 0.9% increase for anyone over the familiar $200,000 ($250,000 for married couples filing jointly) cut-off. The other slice of the healthcare tax pie is an additional 3.8% Medicare surtax on investment income that exceeds the $200,000/$250,000 cut-offs.

In my next post, I’ll focus on the more positive tweaks to the tax code. Whatever your situation, now is the time to talk with your financial adviser to evaluate how these changes will impact your family.