Which of the following is an advantage of purchasing an annuity?

Tax-deferred growth is a significant advantage of purchasing an annuity. This feature allows the investor's earnings to grow without being subject to income tax until withdrawals are made. By postponing the tax obligation, individuals can potentially accumulate a larger sum over time compared to taxable investment accounts, where taxes must be paid annually on income and realized capital gains.

Additionally, tax deferral can enhance long-term growth, making annuities an appealing option for retirement planning. The ability to compound growth without immediate tax implications is particularly beneficial for those looking to build wealth over the years, especially as they approach retirement when they may enter a lower tax bracket and can take distributions more strategically.

In contrast, the other options present limitations or misconceptions about annuities. Immediate high returns are not guaranteed, and many annuities focus on steady growth rather than high-risk, high-return opportunities. While some annuities may have lower fees than others, it is common for them to come with various charges, such as management fees and surrender charges. Lastly, non-guaranteed income would not typically be considered an advantage, as individuals typically seek the reliability of guaranteed income streams, especially in retirement.