Although small businesses employ more than 40 million people in the United States, their workers historically have been far less likely than those at larger firms to have access to retirement plans.

In recent years, this picture has begun to change as more small employers adopt retirement plans that employees actually use. As a result, small businesses today are 58% more likely to have active retirement plans than in 2019, according to a new report from Gusto, which provides payroll and benefit services.

Two forces likely have contributed to this shift — regulatory changes in many states and employers responding to a tight labor market. Among the other significant findings in the report:

  • Increased retirement plan use at small businesses has increased retirement savings access for 5.6 million workers. The share of small businesses with an active retirement plan rose from fewer than 1 in 5 to nearly 1 in 3 between 2019 and 2025.
  • Businesses with fewer than 10 employees saw 80% growth in retirement adoption. Businesses with fewer than 10 employees saw the largest gains in active plan adoption, increasing access for workers at firms that historically have been least likely to offer retirement benefits.
  • Black and Hispanic small-business employee participation in retirement plans have increased by 52% and 71%, respectively, since 2019. More than half of workers with access to an active plan now participate, with especially strong gains among hourly, lower-income, Black and Hispanic workers. At the same time, more than half of small-business employees do not have access to a retirement plan. This presents an opportunity to increase long-term financial security for many workers. 
  • Small-business employees typically save from 4% to 5% of their income in their retirement plans. Despite gains in access and participation, deferral rates at small businesses have remained largely unchanged since 2019. Combined with the surge in inflation in 2021 and 2022, this has led to a decline in real retirement savings, particularly among the lowest earners.

"Access to active retirement plans at small businesses has expanded substantially since 2019, bringing millions more workers into plans their employers and employees actually use," the report concluded. "However, higher access and participation have not translated into stronger savings outcomes, as deferral rates have remained flat and real retirement savings declined during the surge in inflation in 2021 and 2022.

"These patterns reveal a widening gap between improved coverage and deteriorating financial outcomes for small-business workers. Closing that gap will depend on whether expanded access ultimately can translate into higher levels of saving."

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