I have 3 kids, a teen a 2 yr old and a 3 month old. We don't normally hand the teen's clothes down to the 2 year old, so I am not storing clothes for 13 years.
But it only makes sense to hand down the 2 yr old's clothes to the 3 month old, since they were born in the same season. It doesn't make any financial sense to get rid of them, then buy new when the younger one needs it, we don't have much money.
In addition to that, the 2 yr old does get hand me downs from cousins and such. And the 3 month old is starting to outgrow stuff, but DH and I aren't sure we are done havng kids and if we do decide to go for more, they will be close together too. So again, it doesn't make financial sense to toss stuff out that we are probably going to need again soon.
I just don't have a system for managing the storage of this stuff. We have tubs of stuff that is currently "between kids." like 12 month old clothes. But I am out of storage for the newborn stuff that doesn't fit dd3 anymore, so it's still in the dresser, with the 3 month old stuff (we put both in the dresser at the same time when we loaded everything in the tubs in the first place, so nothing has been removed.) DD2 just recieved a bunch of stuff from her cousin that will fit her this summer, but is too big and the wrong season now. It's just sitting in bags on top of the tubs.
Suggestions or ideas (other than get rid of it.)