Smallest employers are adopting retirement plans fastest, Gusto data show

Gusto Inc.'s anonymized payroll data shows the smallest U.S. employers moving fast to add retirement plans. Among private-sector businesses with two to 99 employees, 31% offered an active plan in 2026. The share was 19% in 2019. That is a 64% increase. PLANADVISER reported the analysis.

The smallest firms drove the change. Businesses with fewer than five employees doubled their adoption rate to 20%. The five-to-nine-employee bracket reached 36%. It had been 22%. Every industry studied gained ground. Professional services, finance, and information firms still lead at roughly 45%. The highest proportional growth came in historically low-participation sectors. Hospitality adoption tripled to 12%. Recreation climbed to 21%. Agriculture reached 17%.

Hourly workers remain the pressure point. They make up 63% of the small-business workforce. But they account for only 43% of its retirement savers. Access is spreading, though. 38% of hourly employees now work for a business with a plan. That is nearly double the 2019 share, which was 21%. Salaried access sits at 55%. Among hourly workers with a plan available, participation rose to 45%. It was 34% previously. The share of all hourly employees saving through work reached 17%. It had been 7%.

State policy is visible in the numbers. For businesses with two to five employees, plan adoption grew 121% in states with auto-IRA mandates. It grew 54% in states without them. Gusto attributes the broader gains to labor-market competition, SECURE 2.0 tax incentives, and owners' desire to hold onto workers.

Small plans are arriving with design and compliance questions, and hourly participation is improving from a low base. The gap between hourly access and hourly participation is the next problem to solve.