What is one of the main benefits of an Individual Retirement Account (IRA)?

One of the primary benefits of an Individual Retirement Account (IRA) is the tax-deferred growth of investments. This means that any earnings, such as interest, dividends, or capital gains, generated within the account are not taxed until they are withdrawn, typically in retirement. This feature allows individuals to accumulate a larger retirement nest egg over time since the investments can grow without the immediate burden of taxes. As a result, individuals can take advantage of compound interest, maximizing their growth potential as their investments can reinvest their earnings.

In contrast, other options like tax-free healthcare coverage are unrelated to the functionality of an IRA and pertain to different types of insurance products. Whole life coverage refers to a type of life insurance that provides a death benefit along with a cash value growth component, which does not align with the purpose of an IRA. Immediate annuity payments also do not apply here, as IRAs are focused on retirement savings rather than providing immediate income. Thus, the benefit of tax-deferred growth positions IRAs as advantageous for long-term retirement planning.