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Want to be a 401(k) millionaire? Here’s what it takes.

The number of people with $1 million or more in their 401(k) or IRA increased in the first quarter

lots of money inside bags (fergregory/iStockphoto)

Think of them as the elite Navy SEALs team of retirement savers.

These are the workers who have saved and invested their way into becoming millionaires in their workplace retirement accounts. Their numbers are small but their retirement accounts are substantial.

It was looking a little bleak for 401(k) millionaires. Volatility in the stock market at the end of 2018 kicked a lot of workers out of this elite team.

Fidelity Investments reported that for the fourth quarter of 2018, there was a 28.6 percent drop in the number of 401(k) millionaires in plans it administers.

But they are back.

The number of people with $1 million or more in their Fidelity 401(k) plans increased to 180,000 in the first quarter of the year, up from 133,800 reported in fourth quarter of 2018, according to Fidelity, one of the country’s largest administrators of workplace retirement accounts.

The number of IRA millionaires also increased to 168,100 up from 138,800, Fidelity said in its most recent analysis of retirement saving trends.

The number of 401(k) millionaires in plans administered by Fidelity is small figure — less than 1 percent. However, you can learn a lot from their investment practices. Here’s what it takes reach the millionaire status.

Time. They started saving early in their careers. Most 401(k) millionaires have been contributing to their plan for about 30 years. And by the way, many aren’t earning six-figure incomes.

It also helps if you can contribute as much as the IRS rules allow. The maximum amount of money workers can contribute to a workplace retirement account during the year increased to $19,000, up from the $18,500 limit for 2018. If you are 50 or over there is a catch-up provision that allows you to contribute an extra $6,000 for a total limit of $25,000 to an employer-sponsored retirement plan.

Read: Will Social Security be around when I’m ready to retire?

Consistency. The millionaires faithfully kept saving even as they bought homes or had children. They contributed at least 15 percent to their workplace plan, a percentage recommend by Fidelity. This might include a combination of what they’re putting in and a matching contribution from their employer.

Most employers offer a program whereby employees can sign up for an “automatic increase.” So, direct your employer to automatically boost your contribution by a certain percentage every year. This helps ease the pain of reaching for that 15 percent target.

Read: Can you save half your income so you can retire early? FIRE advocates say it’s possible.

Not leaving free money on the table. If there’s a company match, 401(k) millionaires take full advantage of it. They contribute enough to their plan to always get the match.

Read: Do you need $5 million to retire early? Suze Orman says so. But ‘FIRE’ devotees say no.

Not afraid of risk. Because they are in the market for the long haul, on average, they invest in equity mutual funds. They understand that one of the biggest risks to their retirement savings is inflation.

Read: Investors share fears and frustrations in the era of Trump

Not panicking during stock market downturns. They didn’t let bear markets — a period of falling stock prices — chase them away from equities. In fact, they see tumbling markets as a flash sale. It’s an opportunity to buy more stock shares at lower prices.

Read: Until Trump’s trade war with China is over, it’s probably best you don’t look at your 401(k)

No question, this list is tough. You might be discouraged by what it takes to be a 401(k) millionaire. You may not be able to afford to save 15 percent of your pay for retirement. Or, maybe time isn’t on your side because you started saving later in your career. Still, don’t quit.

To join the elite Navy SEAL program, potential recruits have to push themselves to their maximum physical ability — and then some. The same is true if you want to become a 401(k) millionaire. You’ve got to push yourself to save more and not be fearful of the stock market.

But even if you never join this elite group, the boot camp-like discipline its members practice can still leave you in better shape for retirement.

Read more:

Most investors aren’t on ‘FIRE’ about this early retirement movement

As stocks go wild, here’s what should you do if you’re retired

Stop sacrificing your retirement to coddle your adult children.

Your thoughts

Did you drop from the millionaire’s club but have returned to its ranks? Did you change your investment strategy as a result of losing your millionaire status? Send your comments to Please include your name, city and state. In the subject line put “Millionaire’s Club.”

Retirement rants and raves

I’m interested in your experiences or concerns about retirement or aging. What do you like about retirement? What came as a surprise?

If you haven’t retired yet, what concerns you financially?

You can rant or rave. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

Last week’s topic focused on the fact that Social Security will only have enough money coming in by 2035 to pay 80 percent of benefits.

Read: In search of a simple fix for Social Security

I asked readers to weigh in on the various solutions to fixing Social Security, such as eliminating the income cap on which the tax is imposed. For 2019, that is $132,900. So earnings above that amount are not subject to the Social Security tax.

“I’m a family physician who sees daily how so many of my patients have only Social Security for retirement income due to the extinction of the defined benefit retirement plan and the substitution of the defined contribution plan,” wrote G. Kristin Crosby. “I earn more than the cap and see no reason we shouldn’t lift that cap to all.

Tim Schmieg of Raleigh, N.C., says, “Raise the age from 62 to 65 to be able to apply for early for Social Security benefits just like it is for Medicare.”

“Raise Social Security revenue, don’t cut benefits for a program that’s become more essential to beneficiaries over time,” wrote Paul Rossa from McLean, Va. “I’m all for increasing the wage cap, but studies consistently show that the long-term health of the Social Security Trust Fund requires increased FICA contributions from all. The FICA rate hike can be phased in gradually. Higher FICA rates also can be offset, fully or partially, for payees by lowering income tax rates or through income tax credits.”

David Williams from Oklahoma favors getting rid of the income cap. “Do not raise minimum age,” wrote the 72-year-old. “Many blue collar workers are beat down and unable to continue working, even if not technically disabled. Do not raise the full retirement age either. We may be living longer, but our health declines quickly in 60s.”

Patti Delaney of Tampa wrote, “Eliminate the cap on wages that are subject to the 6.2 percent FICA tax, or at least raise it significantly over the next 10 years. Raising the full retirement ages or decreasing benefits to recipients would cause the most harm to those who’ve earned lower incomes through their working years and may not have had the means to contribute to retirement savings accounts.”

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