Can IRA losses be written off against income at retirement?

No. you never paid taxes on the $5,000 to start with. when you contributed that to IRA you received a tax deduction for that. You cannot deduct it again.

That is just money you will never take out of IRA so you will never be taxed on.

No. Losses within a deductible traditional IRA are not deductible. You are just not taxed on the income that was not earned (if that makes any sense).

For example:

Traditional IRA 1: Invested $5000 and it is now worth $20,000

Traditional IRA 2: Invested $5000 and it is now worth $1,000

At age 60, you with draw all $21,000. The $21,000 is taxable to you.

You can withdraw from an IRA an any time but, prior to age 59 1/2, you are subject to an additional 10% penalty unless you meet one of the exceptions.

Since the money going in to the IRA was never taxed, your basis in the IRA is officially zero. Therefore it's not possible to claim any loss at all.

If you have one or more Roth IRAs and liquidate ALL of them and the proceeds from the liquidation is less than the original investment then you may have a deductible loss. But with a traditional IRA there is no deductible loss.

No. You will effectively get the deduction when you take it out because you will have less taxable income to report.

No since they are paper losses. Many people lost million or more

No. You have lost the money which was never taxed.