11/18/2014 06:07 pm ET Updated Jan 18, 2015

Six Reasons to be Thankful for Your 401(k)

Now is the time when most of us start reflecting on all we have to be thankful for - including friends, family and good health. But what about your financial health? If you're one of the 74 percent of full-time, private sector employees with access to a workplace retirement savings plan*, count your blessings.

The 401(k) is one of the most important vehicles for creating a strong financial foundation and many plans are packed with features designed to help workers maximize their benefits. In fact, a recent survey by Schwab Retirement Plan Services, Inc. found that three-quarters of participants said their 401(k) is in better shape today than ever before.**

Here are my top six reasons to be thankful for your 401(k) this Thanksgiving:

1. The employer match: If you're lucky enough to receive matching contributions from your employer, congratulations - you can make that money work for you. The recent survey found that 90 percent of respondents said their employer offers a matching contribution, and close to 70 percent believe that saving enough in their 401(k) to take advantage of the full match is one of the most important things people should do to improve their personal financial health. The match is like an automatic return on your investment that you can't get anywhere else.

2. Automatic features: When it comes to saving for retirement, getting started can sometimes be the hardest part. Thankfully, many employers make the process much easier by automatically enrolling employees in a 401(k) once they've met specific requirements (generally, length of time with the company). Moreover, automatic savings increases are also becoming increasingly popular. This feature automatically raises your savings rate at specified intervals, getting you closer to meeting the contribution maximum and, thus, helping you meet your savings goals. Our survey found that 43 percent of participants haven't increased their 401(k) contributions in the past two years, so auto-increase can really come in handy. Remember, saving for retirement is important, but saving enough is critical.

3. Managed account services: We could all use a little help sometimes, especially when it comes to something as important as saving for retirement. Fortunately, more and more employers offer managed account services as part of their 401(k) plans, which may include personalized, professional advice. About 70 percent of 401(k) participants in the survey said they would feel very or extremely confident in their investment decisions if they had the help of a financial professional. A confidence boost like that is something we can all be thankful for.

4. Low-cost investment options: I think we're all grateful whenever someone helps us save money. The good news for 401(k) participants is that many employers include lower-cost investment vehicles, like index mutual funds and exchange-traded funds, as part of their plan lineups. These vehicles often have lower expense ratios than other investment choices, like traditional mutual funds, which means less of your savings will go towards management fees and more will go into your account.

5. Tax flexibility: Employers are increasingly offering their workers a choice between the traditional 401(k) and the Roth 401(k), each of which offers a distinct strategic tax planning opportunity. In a traditional 401(k), your contributions are made on a pre-tax basis and you pay taxes when you take distributions from the plan, meaning you feel less of an impact on your take-home pay throughout your career. In a Roth 401(k), your contributions are made on an after-tax basis and distributions of any investment earnings are tax-free after you meet certain requirements. A Roth 401(k) can make sense for young workers who anticipate retiring in a higher tax bracket than when they began their careers, and for people who expect tax rates to rise in the future.

6. A cornucopia of resources: These days, there are tons of tools, online calculators and mobile apps to make retirement planning a more efficient and more personalized experience. In many instances, you can look up important information about your plan and even make changes to your investment selections right on your desktop or mobile device. If you're like me, you're grateful for anything that saves time and hassle.

As you can see, there's plenty to appreciate about the modern 401(k). And with the winter holidays coming up, anything that can help you stay on track financially is something to be thankful for. Happy saving, and Happy Thanksgiving!

*Bureau of Labor Statistics, "Employee Benefits in the United States - March 2014,"

**Schwab Retirement Plan Services, Inc. in conjunction with Koski Research, 401(k) Participant Survey, 2014.

©2014 Schwab Retirement Plan Services, Inc. All rights reserved. 1114-7839

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