Vanguard does a report every year called “How America Saves” on the 401(k)-type plans that it manages. The 2013 Vanguard report has some interesting insights: Thirty-two percent of employees do not contribute to a 401(k). 27 percent of employees older than 55 do not contribute. Among employees with incomes greater than $100,000, 12 percent do not contribute.

When people ask us how much they should be saving, we tell them that ideally, if they want to retire with the same purchasing power in the future as they have today, they need to set aside a minimum of 15 percent. Under the old pension system, people contributed 15 to 20 percent. Companies built that amount into the benefit package. Nothing stops people from saving at that rate today, but many may not be doing so. The picture here is pretty clear: If people don’t contribute to their 401(k)s, or if they don’t contribute enough, of course they are not going to have enough in their accounts to cover their retirement. The 401(k)s and IRAs* have pretty much replaced pensions, but people may not have the investment skills needed to deal with them properly.

For example, people often change employers so it’s not unusual for them to have multiple accounts from previous jobs. What we see is that when people change jobs, they tend to look at their account with the previous employee as found money. They withdraw it and end up paying a penalty of 10 percent, if they are younger than 59 1/2. Not only that, but there will be taxes due on the contributions and earnings of the ‘windfall’ which may also result in putting them into a higher tax bracket. The result is that they may lose 40 percent of that money. If that’s the way you save for retirement, you are always starting from zero.

*Age, income and contribution limits vary for each plan.