How to Help Employees Save for Retirement

More importantly, offer investment choices that are easy to understand. Instead of giving them brochures of 12 funds in the plan, for example, explain how one fund may be better-suited for someone in her 20s who can afford to wait out fluctuations in the market, while another fund is more appropriate for someone in her 50s with an eye toward retirement.

Lastly, teach your employees to view investing in the company 401(k) as just one of several things they should do to fund their own retirement. Too often, says Thomas Mackell, chairman of the board of directors for the Federal Reserve Bank in Richmond, Va., people borrow from their 401(k) to pay everyday expenses.

"I have visions of elderly people living under bridges," says Mackell, who also is author When The Good Pensions Go Away: Why America Needs a New Deal for Pension and Health Care Reform (Wiley).

"Once they've cashed it all out, they are not going to have enough to be able to retire," Mackell says. "I am incensed about the situation."

Mackell advocates a cabinet-level post devoted to long-term demographics and their impact on society and the economy. He also wants people to become more educated about their retirement options and push for reform, in which 401(k)s are not "the only game in town."