There's a silver lining here. Lusardi says defined-contribution plans such as 401(k)s are ideal for workers who change jobs a lot because of their portability and flexibility. You can take a 401(k) with you to a new employer and roll it into your new plan if the plan permits, or your can roll it into an IRA. With the old-style defined benefit plan, you were generally stuck at one job for many years if you wanted to collect a pension.
However, defined-contribution plans require a lot more hands-on involvement and financial literacy from the worker, Lusardi says. Unfortunately, in many cases, workers fall short.
"Most workers are not well informed about their pension plans and often don't even know which type of pension they have," she says.
Fear of investing. Susan Trammell, a New York-based Chartered Financial Analyst, says people sometimes have psychological barriers to saving. Procrastination and risk aversion are two biggies, she says.
"To get people to save, there has to be an atmosphere of trust (between the employee and employer or financial institution) and trust is something the industry is only beginning to look at," she says.
Once you establish a relationship of trust, you can start setting up the environment to place a person in an investment plan, she says.
Trammell believes financial institutions and employers must also be more active in promoting financial literacy if they expect greater employee participation in retirement plans.
Inertia. The disinclination to take action is a widespread national phenomenon, particularly when it comes to saving money.
For those who view retirement saving as a bigger nut to crack than it actually is, starting with a small automatic deduction from their paycheck and gradually increasing the amount is the best way to save, says Anita Grossman, a wealth planning adviser at Lincoln Financial Group in Cherry Hill, N.J.
"Some people think it's just not doable because they're used to spending all their money and they never tried to save some of that money, so they think they can't live without it," she says.
"If you start with extremely small amounts and just keep increasing it, most people will get to the point where they'll be saving a good amount of money and they won't even notice it missing from their paychecks."
The future of retirementThe oldest of some 78 million baby boomers, those born between 1946 and 1964, are eligible for Social Security benefits starting this year. The rest will become eligible over the next 18 years.
Many will find themselves working past age 62 because they won't have enough saved or they'll need to keep company medical benefits.