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The number of 401(k) millionaires is rising — but there’s a catch. Some baby boomers are taking big risks.

Fidelity says the number of 401k participants who had $1 million or more in workplace retirement plans has increased since last quarter.
Fidelity says the number of 401k participants who had $1 million or more in workplace retirement plans has increased since last quarter. (iStock)

It’s still a relatively small group, but it’s growing.

The number of 401(k) participants who had $1 million or more in workplace retirement plans managed by Fidelity Investments hit 200,000 in the third quarter of this year, up from 196,000 in the previous quarter.

“We highlight the growing number of people hitting this milestone to help illustrate that it’s possible to reach $1 million in your 401(k),” said Katie Taylor, a Fidelity vice president. “This is not an analysis or a survey, these are actual dollars in real 401(k) accounts.”

The average millionaire at Fidelity has been contributing to his or her plan for close to three decades, according to the company, which is the country’s largest administrator of 401(k) plans. And since many of these millionaires tend to contribute the maximum amount allowed, they will no doubt be happy to hear annual limits are increasing.

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

The Internal Revenue Service recently announced that the maximum contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan will be bumped up by $500 to $19,500 for 2020. If you’re older than 50, there’s a retirement catch-up provision, allowing you to save even more. Next year, this limit is also getting a $500 increase, to $6,500.

While Fidelity has seen a continuing increase in contributions to 401(k) plans, only about 9 percent of 401(k) savers hit the annual contribution limit by the IRS. But among baby boomers, 16 percent contributed the maximum. About 13 percent of people who max out their 401(k) also make catch-up contributions.

Why do these trends matter?

Because numbers can inspire. Fidelity does a quarterly deep dive into the 30 million retirement accounts it manages to highlight contributions and saving behaviors.

Whatever your retirement savings goal, Taylor says to follow the lead of the 401(k) millionaires: Start early, save 15 percent throughout your career and be sure your asset allocation aligns with your age and time horizon.

Fidelity recommends people have 10 times their ending salary in retirement savings. For many, this means they don’t have to feel as if they’re a failure if they can’t accumulate $1 million or more in a pretax 401(k) account.

Fidelity analysis shows that consistency pays off. Longtime 401(k) savers are breaking records. Those workers who have been saving in their 401(k) plans for 10 years straight had an average balance of $306,500. Among workers saving for at least 10 consecutive years in a 403(b) account, the average balance is $179,000, which is more than four times what the average balance was for this group in the third quarter of 2009.

Although the stock market has risen over the past year, it’s been a rocky ride. Such volatility can be frightening. But despite the downward swings, only 5.1 percent of 401(k) savers made a change to the investments within their 401(k), Fidelity reported.

“Most retirement savers are beginning to understand the market volatility is normal, and they understand that they should take a long-term approach to retirement savings and not make changes to their account based on short-term market events,” Taylor said.

More employees are investing in target-date funds, which is a “set-it-and-forget-it” way for people to invest for retirement. Target-date funds automatically rebalance to reduce an investor’s risk as he or she nears a target retirement date.

The number of workers becoming retirement-plan millionaires hits record highs

As of the third quarter, 53 percent of 401(k) savers held all of their plan money in a target-date fund, up from 37 percent five years ago. And among millennials, the percentage saving in a target-date fund was 70 percent.

But here’s a trend that has Fidelity concerned: Many 401(k) participants may be positioned too aggressively based on recommended stock allocations for their age group.

Fidelity compared average asset allocations with an age-based target-date fund and found that 23.1 percent of 401(k) savers have a higher share of equities than might be wise.

“We were concerned that many people may not have realized that they had more stock than suggested in their 401(k), which may have happened due to the market growth we’ve seen over the last few years,” Taylor said. “Having more stock than suggested in your 401(k) could expose your savings to unnecessary risk if the market drops, and this could be especially damaging to baby boomers who are nearing retirement. We’re encouraging people to review the stock allocation in their retirement account to make sure it’s at a level they feel comfortable with.”

When they were small, my children loved to play follow the leader. It’s a simple game. You just do what the leader does.

Although the data suggests most employees won’t ever join the ranks of the 401(k) millionaires, following their lead is still a winning move.

Readers may write to Michelle Singletary at The Washington Post, 1301 K St. NW, Washington, D.C. 20071 or To read previous Color of Money columns, go to