> How is it the only option?

It’s not but it’s a lot easier for many people if they don’t realize they have the money.

> If withholding is less, what’s stopping people from saving the reduction?

Reality. It’s no different then walking around town with a couples $20 bills vs walking around with your pockets empty. Sure you could just not spend any of it but it’s a hell of a lot easier if you don’t even have the option.

Not having cash on hand and being forced to make due with less is surprisingly effective.