What you need to know about 401(k)s, retirement

CBS News Analyst Mellody Hudson discusses 401(K) pluses and minuses

(CBS News) Many Americans have a 401(k) savings plan, but when it comes to actually using that money towards retirement, some financial experts worry that it just won't be enough money for most people to live on. According to a recent USA Today column, 401(K) plans have been an "alarming failure" and won't enable most Americans to adequately save towards a comfortable retirement.

"I don't agree with that story and I believe there's a lot of hyperbole there," said Mellody Hobson, a CBS contributor and analyst. "But I do believe Americans need to save a lot more."

According to Hobson, the average American family makes $50,000 a year, and when they retire the average amount of money they have in a 401(k) is $120,000. If you go to full retirement, you can collect around $1,200 a month from Social Security, which as Hobson points out may sounds like a lot, but really isn't when you look at the numbers. She says that on average, that savings plan creates an income of about $22,000 a year.

"This is not enough money," said Hobson. "Hopefully that's a wake-up call for people to save a lot more."

Hobson advises that Americans should start saving as much as they can in the beginning, as the compounding for multiple years makes a huge difference. This is important as the 401(k) was originally supposed to be supplementary, and differs from when more Americans had access to a pension, and predictable Social Security checks.

"Every single person has some amount of money that they waste. There's leakage in our wallets," she said. "If you could clamp down on some of that, a few dollars a week, it makes a huge difference over time."

She advises to not to take money out of that savings pool. She cautioned that 70 percent of people say they took out some money from their retirement accounts when they changed jobs, and it's important to be wary of that. At the same time, she suggests immediately rolling over the money to a new 401(k) or IRA as soon as possible when you change or lose a job, so you do not lose track of the money.

It's also important to know how your money is invested, and how much your company will match.

"You want to contribute as much as possible, but your bare minimum is to contribute enough to get the company match," she said. "Don't walk away from the free money."

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