We know that not enough people are saving for retirement, but there is an elite group managing to reach rarefied territory.

The 401(k) millionaire’s club is relatively small, but it’s growing. The number of workers with $1 million or more in their 401(k) increased to 157,000 at the end of the first quarter this year, an increase of 45 percent compared with the same time a year earlier, according to Fidelity Investments, one of the country’s largest administrators of workplace retirement accounts.

But getting to the millionaire status took some time. Most 401(k) millionaires have been saving for about 30 years, according to Fidelity.

“There’s no doubt that many of Fidelity’s 401(k) millionaires have benefited from the market’s positive performance, but they also exhibit many of the behaviors we recommend to make the most of your savings,” said Jeanne Thompson, senior vice president for Fidelity. “They contribute enough to get their full company match, they’re less likely to take 401(k) loans, they don’t cash out when changing jobs and they invest for growth — on average, 401(k) millionaires hold 76 percent of their savings in equity mutual funds.”

Workers can now contribute up to $18,500 each year to a workplace plan such as a 401(k) or the federal government’s Thrift Savings Plan (TSP). If you’re over 50, there’s a catch-up provision that allows you to contribute an extra $6,000 for a total contribution of up to $24,500 to an employer-sponsored retirement plan.

The average account balance at the end of the first quarter for individuals who save in both a Fidelity IRA and a Fidelity workplace savings account, such as a 401(k) or a 403(b), rose to $299,600, up 9 percent from the $275,700 at the end of the first quarter in 2017.

Looking at just 401(k) accounts, Fidelity reported the average balance dropped to $102,900, about 1 percent lower than the previous fourth quarter in 2017. But year-over-year, the average balance was up 8 percent.

Fidelity’s analysis of first quarter data also found the following.

— Workers who have saved in their company’s 401(k) for 10 years had a record high average account balance of $290,100, compared with $250,500 a year ago.

— Those employees who have saved for 15 years had an average balance of $379,600, up from $330,200 a year ago.

The number of TSP millionaires has also been growing, up to 23,962 at the end of last year, compared to 3,272 in January 2016, reported Mike Causey for Federal News Radio.

“Although found at many grade levels and in nearly every agency throughout the country, all of the people in the million-plus column have the same things in common: they have invested for the long haul, and invested heavily or exclusively in the stock-indexed C and S funds,” Causey wrote. “When markets drop dramatically — as they did in 1997 and during the Great Recession — they continue to purchase stocks getting more shares each pay period because they are investing the same amount of money, which purchases a larger share of the C and S funds. Also, all of those eligible for it have taken advantage of the total 5 percent match available from their agency.”

Looking at the data, millennials should be encouraged because it shows investing early can help them reach the millionaire club status.

Share this with a young adult you know: What does it take to become a 401(k) millionaire?

“Hitting that $1 million retirement savings mark often takes the better part of any career,” writes Susan Tompor, Detroit Free Press personal finance columnist. “After all, there are limits to how much you can save each year in a 401(k) — and there is the potential downside of brutal bear markets, like the meltdown in 2008-09. More time can mean more money.”

Still, reaching the millionaire milestone may not give some people a sense of security.

Read one woman’s worry about outliving her retirement savings: This is how it feels to be a millionaire and still feel broke

Your thoughts
Are you a 401(k) or TSP millionaire? What advice would you give to people who want to get to where you are? Do you feel secure with your millionaire status? Send your comments to colorofmoney@washpost.com. Please include your name, city and state. Put “Millionaire” in the subject line.

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, 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 colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

In last week’s retirement newsletter, I asked how did you know you were ready to retire?

For some, the decision to retire wasn’t theirs.

“I retired because my organization said I had to,” Robert Hanawalt wrote. “So, I did but really didn’t want to. Since I worked for an international organization in a nonfamily duty station, I had to move back home to Washington where I hadn’t really lived in years and kick the tenants out of our house and do lots of work to get it ready to live in again. Then in the first week of my retirement, the office called and asked me to go to West Africa to Mali to work in an emergency. I refused. They kept calling me back until finally, two months later, I accepted to go for a two-month short contract. You know what happened? I worked there for 11.5 months and then hoped to retire again.”

Several more stints in various countries and Hanawalt was back working.

“I am a sucker for helping out when there is an emergency and doing short stints is wonderful to keep your feet wet and up to date on colleagues and rules and regulations,” he wrote.

Donnie B. from Hanover, Pa., said after 35 years of “loyal service” he was laid off from his last job. “So now it is our problem to figure out to making it on just Social Security. I will be 80 this year if I make it.”

Kenneth Nusbaum of Ormond Beach, Fla., retired from a tenured professorship. “While I enjoy some of the unstructured time, I still have not reassembled a community of good friends nor a sufficient support system. Lots of organizations hear my qualifications and ask me to join the board. But, after fixing problems for over 30 years, I’d like to be just a rider sometimes; invite me for a beer rather than [attending] another committee meeting. Do not retire if you cannot identify a continued or welcoming sustaining community that supports something besides your contribution.”

Hampden Smith from Pompano Beach, Fla., wrote, “The biggest change when I retired was not finding what to do with my time or, narrowly, how to manage a budget. It was the absence of a paycheck and having to learn — for the first time, really — how to be an investor. All of a sudden, no automatic income. There was, of course, what we’d saved and Social Security. But that was it. If we were to live safely throughout retirement (30 years?) then I’d/we’d have to learn how to invest the fixed amount of money we had. All bonds? No, because inflation would eventually put us in poverty. Highflying risky investments? No, because of the likelihood some disaster would ruin us. Whether to invade principal or try to live off dividends and interest alone? All questions, I was horrified to realize, I had not been confronted with before. Stupid me? Probably. But in my defense, it was an entirely new topic, one I had not been preparing for. Takes a long time to get comfortable with these complex issues.”

To Smith’s point read: Managing Income During Retirement

Daniel Dunn of Winchester, Calif., retired in 2011. His wife retired a year later. “We are doing well financially. My wife worked for an agency that pulled out of social security, so her SS payments are very low. When our children were growing up, we had little cash to spend. It seemed like we barely made it to the end of the month before the money ran out, but my wife’s agency matched her 401 (k) deposits up to 10 percent of her salary, so we always made sure to save that much to get that gift. Then our children started leaving the roost, and we were able to save a little more each month. By the time we quit working, we were sitting comfortably. We have a team of financial advisers, and we meet twice a year to discuss our finances. We have grandchildren in Northern California and Nevada, so we travel to see them about four or five times a year. We haven’t done much traveling beside seeing our grandchildren lately because we are so busy.

The thing that surprised both of us after we retired is that we were able to get everything done while we were working. We are busy all the time. We started taking classes at the local Community College, and we found out my wife is quite an artist. She is a great photographer. She creates beautiful ceramic pieces, and she has an incredible talent for drawing. We both take piano. We both took guitar lessons. We spend a lot of time working in the garden and trying to keep one step ahead of the gophers and bunnies who love to destroy landscaping. I was fearful we would not have enough money in retirement, but we are doing well. I am actually getting more money now than when I was working.”

Planning is key to determining when you are ready to retire wrote Ed Johnson of Grand Prairie, Tex.

“When I turned 55, I started saving as much as I could, employee stock, 401 (k) and private IRA. I calculated all my expenses and set up a monthly budget. I worked for 37 years and was so ready to quit so I stuck to my aggressive saving and hoped I could get to 62 without a layoff or any other catastrophe. At 61, there was a layoff coming and I was asked to rate all my subordinates and get the list to them. I thought about it long and hard and decided to throw my name in the hat. I wasn’t sure I was ready psychologically but with the package that they were offering I knew financially I was set. So, I checked all the numbers, talked with the wife and grown-up kids and pulled the trigger at 61. You never know the future, but I knew I sure didn’t want to work till I was 66 and I am so glad I made the decision. Everybody is different, but the key is the plan. You have to have a plan and a little luck helps. Three years later at 63 I am so happy. My message to others is plan, plan, plan.”

Shankha Mitra of Boulder Creek, Calif., wrote, “My wife and I both left our careers in technology and law last year after 25 years. I struggled with aligning my values and my work for many years and its all-consuming nature. We finally executed on our plan of living and working (for a tiny stipend) at a Buddhist retreat center. It happened a few years earlier than I was expecting; the kids were supposed to have finished college in the original plan. Finally, I feel my work is of some benefit to society and I can devote my energy to things we like to do: play the violin, travel, and a life that is introspective and connected to nature. Plus, my mental and physical health is better. We call ourselves semiretired. We make a tiny amount of money, but one really doesn’t need that much. We fool ourselves into thinking that we need all these things in life, but when it finally comes down to it, we enslave ourselves for material things that we can’t take with us anyway. Do I miss my old job? Not a bit.”

Here’s a reminder from one reader to check your divorce settlement, which can affect your retirement.

“My husband retired from the federal government at the beginning of the year several years ago,” one reader wrote. “Office of Personnel Management (OPM) takes several months to get their calculations straightened out, so he had been receiving estimated payments. About four months after he retired, I came home from work to find him looking so distraught that I thought someone had died. He showed me the letter he had just received from OPM. The letter stated that half of his retirement pay, and all of his retirement survivor benefits would be going to his ex-wife. When I asked how that was possible, it turns out he had never read his divorce agreement which clearly stated what she would get from his retirement. In fact, she had just started receiving payments from OPM and was calling him asking what was going on. As luck would have it, she was about to remarry, and she wanted no part of his retirement money or survivor benefits. My husband hired an attorney to draft legal papers reversing that part of their divorce agreement which she readily signed.”

Newsletter comments policy
Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict).

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