What type of account is typically recommended for retirement savings?

An Individual Retirement Account (IRA) is often recommended for retirement savings because it provides significant tax advantages specifically designed to encourage long-term saving for retirement. Contributions made to a traditional IRA can often be deducted from taxable income, potentially lowering tax liability in the year the contributions are made. Furthermore, the earnings on the investments within the IRA can grow tax-deferred until withdrawal, usually during retirement when an individual's tax rate may be lower.

Additionally, there are other types of IRAs, such as Roth IRAs, which allow for tax-free withdrawals in retirement, provided certain conditions are met. This flexibility makes IRAs a powerful tool for retirement planning.

In contrast, checking accounts are primarily intended for daily transactions and do not offer the investment growth potential or tax advantages that IRAs provide. High yield savings accounts and certificates of deposit offer some interest earnings but generally lack the favorable tax treatment and long-term growth potential associated with IRAs. Therefore, for individuals focused on saving for retirement, an IRA would be the most suitable choice among the provided options.