What is one advantage of investing in retirement accounts like a 401(k)?

Investing in retirement accounts such as a 401(k) offers significant tax advantages that can enhance long-term savings. Contributions to a traditional 401(k) are made pre-tax, which means the money is deducted from your gross income before taxes are applied. This reduces your taxable income for the year in which you contribute, allowing you to retain more of your earnings. Additionally, any growth from investments within the 401(k) is tax-deferred, meaning you won't pay taxes on those gains until you withdraw funds, typically in retirement when you might be in a lower tax bracket. This compounding effect can significantly increase the amount of money saved for retirement compared to investing in taxable accounts.

Other options don't accurately represent the nature of retirement accounts. Immediate cash flow typically comes from income, not from investment accounts designed for growth over time. While it's true that some investments can yield high returns, there are no guarantees in investing, and retirement accounts do not inherently guarantee high returns. Similarly, they are subject to market risks, and while strategies can mitigate losses, they do not guarantee protection against market downturns. Thus, the clarity and advantage of tax benefits in retirement accounts are well emphasized through option B.