This Could Be the Most Valuable Feature of Your 401(k) -- and It's Not Your Employer Match

It's essential to save for retirement consistently throughout your career so you have money to fall back on once your paycheck disappears. And when it comes to building a retirement nest egg, you have choices. You could open an IRA at any institution that offers them, or you could sign up for your company's 401(k) plan if you work for an employer that provides this benefit.

There are definite perks to saving for retirement in a 401(k), and the potential for an employer match is one that might stand out in your mind. Vanguard reports that 95% of employers match worker contributions to some degree in their retirement plans.

But while free money might seem like the best feature a 401(k) might offer, there's a good reason to sign up for your employer's plan even if there's no match involved. You may find that there's another huge benefit to becoming a 401(k) participant.

When your retirement savings are funded automatically

There's a trap people tend to fall into when saving money, whether it's for an emergency fund or a retirement nest egg. We often tell ourselves we'll do our best to spend carefully during the month and send money into savings at the end of it.

But how often does that plan backfire? For many of us, it happens a lot. You tell yourself you're aiming to make a $200 IRA contribution at the end of the month only to get invited to a concert that's just too hard to say no to. Poof -- there goes your $200 for retirement.

Now, on a one-off basis, it's not the end of the world to skip an IRA contribution. But if you end up not funding your account most months during the year, you could end up with a serious savings shortfall on your hands come retirement.

And that's what makes 401(k) plans so valuable. With a 401(k), you're not sending money into that plan out of your checking account every month. Instead, what you have to do is sign up with your employer and let it know how much you want to allocate to your account. You may have to do this as a contribution number (for example, $5,000) or as a percentage of your salary (for example, if you earn $100,000, you'd tell your employer you want to allocate 5% of your pay to get to $5,000 a year in contributions).

The money for your 401(k) then gets withheld from your paychecks automatically. So when you get paid by your employer, your 401(k) has already been funded. That means you're basically forced to stay on track with your contributions.

To be clear, 401(k) contributions aren't set in stone. You can make changes during the year as needed or wanted.

But usually, that means filling out paperwork with HR and having to potentially wait a while for those changes to get processed. So on a yearly basis, the amount you sign up to put into your 401(k) is the amount you should expect to stick with. And that's actually a really good thing.

You can make an IRA function similarly to a 401(k)

The fact that 401(k)s are funded automatically is a great feature. Sure, employer matches are great, but if you don't put in any money, you won't get your match. By automating contributions, you're more likely to stay on track with your savings goals and get your match.

But don't worry -- if you don't have access to a 401(k), you can make your IRA work similarly to one. Just find an IRA that allows for automatic contributions (since many do) and set up a recurring transfer that occurs every time you get paid.

So let's say you receive a monthly paycheck of $3,400 on the first of each month, and you want to allocate $200 of that toward retirement savings. You'd simply set up a $200 monthly transfer to your IRA for the first of the month as well so that money leaves your bank account before you have a chance to spend it.

It's not so easy to stay disciplined in the course of funding a retirement plan. So if you have the ability to participate in a 401(k), it pays to do so for the automation alone. And if a 401(k) isn't on the table, find yourself an IRA that works the same way.