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Why invest in IRA while a low-cost index fund is much simpler?
Lots of good answers.  I'll try and improve by being more brief.  For each option you will pay different taxes: Index Fund:   Traditional IRA Roth IRA You can see that the Roth IRA is obviously better than investing in a taxable account.  It may not be as obvious that the traditional IRA is better as well.  The reason is that in the traditional account you can earn returns on the money that otherwise would have gone to the government today.  The government taxes that money at the end, but they don't take all of it. In fact, for a given investment amount X and returns R, the decision of Roth vs Traditional depends only on your tax rate now vs at retirement because X(1-tax)(1+R_1)(1+R_2)...(1+R_n) = X(1+R_1)(1+R_2)...(1+R_n)(1-tax) The left hand side is what you will have at retirement if you do a Roth and the right hand side is what you will have at retirement if you do traditional.  Only the tax rate differences between now and retirment matter here.  An index fund investment is like the left hand side but has some additional tax terms on your capital gains.  It's clearly worse than either.