Understand the Effect of Tax Deferral on Your Retirement Savings
Tax-deferred investing allows you to delay paying income taxes on your retirement savings and investments until you retire and begin using your money.
Tax deferral generally allows your assets to accumulate faster than if you had invested them in a comparable taxable account. To defer taxes on your retirement savings, you can invest through a tax-advantaged retirement plan, such as an employer-sponsored retirement savings plan or an IRA.
This hypothetical example illustrates how tax deferral boosts retirement savings by 33% over 20 years compared with a taxable account.