Understanding the basics of 401(k) and IRA options is essential for young adults who want to start saving for retirement. A 401(k) is an employer-sponsored retirement savings plan that allows employees to contribute a portion of their pre-tax earnings. Many employers also offer a matching contribution, which is essentially free money added to your retirement savings. On the other hand, an IRA (Individual Retirement Account) is a personal retirement savings account that offers tax advantages for individuals.

For example, a 401(k) may offer a match of up to 3% of your salary, meaning if you contribute 3% of your salary, your employer will also contribute an additional 3%. This is essentially a 100% return on your investment before any market gains. An IRA, on the other hand, allows individuals to contribute up to a certain limit each year, and the contributions may be tax-deductible depending on income level and filing status.

It's important for young adults to consider their long-term financial goals and assess which option aligns best with their needs. Additionally, seeking advice from a financial advisor or utilizing online resources from reputable financial institutions can provide further guidance on making informed decisions about 401(k) and IRA options.