First, savers like Samantha might receive matching contributions from their employers if they make deposits into qualified retirement accounts. If matching is available, Samantha's advantage grows substantially. Next, Samantha's approach can help her develop a habit of saving. Many individuals have found it difficult to save. The United States has a saving rate that is low relative to rates found elsewhere in the world.
Some studies even find the U.S. savings rate to be negative at times.
Samantha's retirement plan can help her save by discouraging her from carelessly invading her savings for short-term gratification. Generally, if Samantha considers taking early distributions from her qualified plan, she will see a warning that such a distribution is normally subject to ordinary taxation plus a penalty. The warning may deter her from taking the early distribution. On the other hand, with no warning, Sam is free to invade and waste his savings. Another advantage for Samantha is based on marginal tax rates.