Consider this: The average 40-year-old American has less than $10,000 saved—for anything. The median balance in any type of retirement plan was only about $27,000 at the end of 2012. Americans' savings rates have dropped in the last generation, while our consumer debt has skyrocketed. In 1980, the statistics were much more favorable. So what's happening?
For one, fewer people now have defined benefit pension plans. Quite simply, the burden and risk of investing has been transferred from the employer to the individual. Our parents or grandparents may have received a pension. They didn't have to figure out how much to save, how to invest or which withdrawal strategy to use to make certain their retirement funds would last a lifetime. They received a monthly pension check, very much as when they were employed. They also received Social Security retirement income. Those two income sources alone may have covered their costs of living.
They may have also held some blue-chip stocks, CDs and perhaps some bonds or mutual funds. However, they likely didn't learn how to invest from their parents or through any type of formal education. Their investing approach was simple: It was what was available through their neighborhood bank, insurance agent or broker.
(Read more: Don't go it alone with a 401(k) plan)