Small Business Sees Boom in Retirement Plans

“There are still thousands of workers who don’t have the ability to build retirement security at work,” John says. “Employers who had considered starting a plan but never got around to it, or who think a 401(k) will help them to attract and keep better workers, have to act.”

Hourly workers see the biggest gains

The smallest companies — those with fewer than 10 employees — account for much of the growth in retirement plan provision, according to Gusto, and gains in access and participation were greatest among hourly workers, who make up nearly two-thirds of the small-business workforce.

Thirty-eight percent of hourly small-business workers now have access to a 401(k), up from 21 percent in 2019, more than three times the rate of growth for salaried employees, the study found. Participation remains far higher among salaried workers, 70 percent of whom contribute if their workplace offers a plan, compared with 45 percent for hourly workers.

Older workers are more likely to work for small businesses and to work part-time, making expanded access especially relevant to them — provided they participate, says Angela M. Antonelli, executive director of Georgetown University’s Center for Retirement Initiatives.

“Access is the on-ramp, not the destination. The real measure of success is whether people stay enrolled, keep contributing and don’t cash out when they change jobs or for other reasons,” she says. “Staying the course and saving is what will actually build retirement security.”

Compared with IRAs, workplace plans like 401(k)s offer more opportunity for older workers to catch up on years when they didn’t save because they often include employer matches and have much higher contribution limits, especially for savers 50 and older.

“While it is never too late to save, it can be later than you’d like, which is exactly why expanding access matters so much,” Antonelli says. “Although you cannot get back the years you did not have a retirement plan, you can absolutely still change your financial future, even if it means you are only saving for 10 or 15 years.”