Small Businesses Push Retirement Savings Access for 5.6 Million Employees
Small businesses are incorporating workplace retirement plans at faster rates.
A new study published by Gusto on Saturday found that the number of small businesses with an active retirement plan increased from fewer than one in five to nearly one in three between 2019 and 2025, representing a 58% increase.
The gains were pushed primarily by very small firms, Gusto finds. Businesses with fewer than five employees saw a boost from 12% to 19%, while workplaces with five to nine employees increased access from 22% to 34%.
The research, which utilizes administrative payroll data from small business firms, finds that the jump has helped raise retirement saving access for 5.6 million workers.
“Using administrative payroll data also allows us to observe very small firms, businesses with fewer than 10 employees, that make up a large share of the U.S. labor market but are often underrepresented in survey data,” Gusto’s Senior Economist Nick Tremper notes in the findings. “This report provides a large-scale view of retirement plan use among small businesses, focusing on plans that employees actually use rather than benefits employers report offering.”
Gusto’s report also remarks how the increase in access could help reduce racial disparities found in wealth gaps. Access for Black small business employees rose by 52% since 2019, and access for Hispanic workers grew 71% over the past six years. “Retirement benefits are a key piece of overall wealth building, meaning that increased access and savings rates could address long-documented wealth differences between White and minority populations,” added Tremper.
All industries have seen a rise in businesses with retirement plans, from hospitality and manufacturing to real estate and healthcare. The largest gains were found in sectors like hospitality, which saw a 188% increase compared to six years ago, followed by recreation at 132% and agriculture at 86%.
Tremper does observe that while adoption rates in these industries are lower than traditional white-collar fields, at typically 4% to 5% of their income added to retirement plans, “the pace of growth reflects a meaningful shift in where retirement plans are taking hold.”
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.