Retirement Benefits for Hospitality Workers: The New Service Standard
Rising wages in leisure and hospitality have created more stable income streams for industry workers. And employers now have an opportunity to help their people better prepare for the future by offering retirement plan benefits.
The leisure and hospitality industry has long been known for entry-level wages. However, in recent years, with the rise of the minimum wage, base pay increases have been observed across the industry.
ADP Research found that the combined earnings from base wages and tips for sit-down restaurant workers have reached nearly $24 per hour — a 28% increase from pre-pandemic levels of $18.60 per hour.
Not only has this impacted how restaurant and hospitality workers earn a living, but it's also created new possibilities for long-term financial planning. And as a result, many restaurant and hospitality employees are navigating new territory when it comes to planning for their financial futures.
The employer opportunity: Increasing retirement plan participation
Workers who previously couldn't commit to regular retirement contributions due to income volatility now have the stability to participate in retirement savings programs. This creates an opportunity for introducing or enhancing retirement benefit programs as powerful retention tools.
Today's workers evaluate employers based on total compensation packages, rather than just hourly wages. While younger workers appreciate employers who help them start building wealth early, more experienced employees value the ability and the tools to save as they age. By offering a retirement plan, companies can better position themselves as the employer of choice, building loyalty and engagement with the long-term benefits that staff want and need.
Serving up benefits for the new reality
Successful retirement programs for service industry workers should acknowledge their unique characteristics and challenges. The diverse nature of this workforce — spanning different ages, career stages and financial situations — requires a thoughtful plan design that can adapt to their varied needs.
When designing a plan for your hospitality business, consider offering:
- Flexible participation options. Programs should accommodate varying work schedules, seasonal employment and part-time vs. full-time shifts that are common in hospitality roles.
- Multiple contribution levels. Offering various percentage options allows workers to increase contributions as their financial situations change.
- Automatic enrollment. Many hospitality workers who previously couldn't afford regular retirement contributions may not immediately recognize that their improved base wage situation now makes retirement savings possible.
- Easy opt-out provisions. Workers may need the ability to adjust or pause contributions during slower seasons or personal financial challenges without penalty.
- Educational programs. Many industry workers may be participating in employer-sponsored retirement plans for the first time and need clear, accessible information about how retirement savings work.
- Mobile-friendly platforms. Retirement plan access through smartphones and tablets is essential for checking balances and making changes on the go.
Adapting to today's normal
With more stable paychecks, restaurant and hospitality workers may be better positioned to build real retirement savings. Are you giving them the tools to make their goals more attainable?
To learn more about offering a retirement plan — or improving the one you already have — reach out to an ADP retirement services specialist or call (800) 432-401K.
ADP, Inc., and its affiliates do not offer investment, tax, or legal advice to individuals. Nothing contained in this article is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Questions about how laws, regulations, guidance, your plan's provisions, or services available to participants may apply to you should be directed to your plan administrator or legal, tax or financial advisor.
M-792942-2025-08-21
