What type of account allows individuals to save for retirement with tax benefits?

An Individual Retirement Account (IRA) is specifically designed to encourage individuals to save for retirement while providing tax advantages. With an IRA, the money deposited can grow tax-deferred, meaning that you won't owe taxes on the earnings until you withdraw them during retirement. This can result in significant savings on taxes in the long run because many individuals may be in a lower tax bracket during retirement.

Furthermore, there are different types of IRAs, such as Traditional IRAs and Roth IRAs, each offering unique tax benefits. For instance, contributions to a Traditional IRA may be tax-deductible, while Roth IRAs allow for tax-free withdrawals in retirement as long as certain conditions are met. This tax-advantaged status is a crucial feature that distinguishes IRAs from other types of accounts, such as standard savings or checking accounts, which do not offer similar benefits.

Savings accounts and checking accounts are primarily designed for storing and accessing cash rather than for retirement savings, and they usually do not provide tax advantages linked to retirement. Brokerage accounts, while useful for investing, also do not offer the same specific tax incentives related to retirement savings that IRAs do. Thus, IRAs are the correct choice when considering accounts that support retirement savings with tax benefits.