In the US, the biggest advantage is the tax shelter built into both 401(k)s and IRAs. You contribute pre-tax dollars to a "Traditional" account, and pay ordinar

In the US, the biggest advantage is the tax shelter built into both 401(k)s and IRAs. You contribute pre-tax dollars to a "Traditional" account, and pay ordinary income-tax on qualifying withdrawals. You contribute post-tax dollars to a "Roth" account but your investments grow tax-free (much like an ISA in the UK). The tax benefits of each account are equivalant, all else being equal. For example: if you contribute $8k/year pre-tax (or $6k post-tax), to an account with 8% annual returns over 30 years, and are a 25% federal tax payer, a tax-sheltered account would leave you $167k better off, than a non-tax sheltered account. These tax shelters can be an incentive to save for retirement, and hopefully avoid missing out on compounded growth.