You too can join the Millionaire's Club 401 (k)

It can be done.

The "that" in this case saves enough in your corporate retirement plan to have a seven-digit account balance. You too, with enough time and consistency, can join the Millionaire's Club 401 (k).

Fidelity Investments has announced that for the third quarter of 2018, the number of people with $ 1 million or more in the employer plans it manages reached 187,400, a leap of 41% compared to last year. This increase is nearly 10 times higher than the 19,300 savers of this type reported ten years ago.

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According to Fidelity, one of the largest administrators of retirement accounts at work, the number of IRA millionaires increased to 170,400, an increase of 25% over the previous year.

Put in perspective, the 401 (k) millionaires reported by Fidelity represent only a small percentage – about 1.1% – of workers who contribute to their employer-based plan. Nevertheless, the growth of this group is impressive 10 years after the financial crisis and at a time when the stock market has caused significant losses – on paper, at least – for many people.

"What we saw after the financial crisis is that most people who save in the 401 (k) pension plan have stayed the course," said Katie Taylor, vice president of Thought Leadership at Fidelity. "And the pace at which people are saving continues to increase."

Workers will be able to contribute up to $ 19,000 a year to a business plan such as a 401 (k) plan or to the federal government's savings plan at the end of the year. starting in 2019. If you are over 50, a catch-up provision allows you to: put an additional $ 6,000 for a total contribution of up to $ 25,000 to an employer-sponsored pension plan.

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The average balance for the 401 (k) s, which stood at $ 106,500, is also up, compared to $ 104,300 at the end of 2017. Since 2008, the average balance has increased by 56%, $ 56,900. The average balance of account 403 (b) reached a record $ 85,500. The average balance of the IRA rose to $ 111,000, up 4%, according to Fidelity.

In addition, people contribute a higher percentage of their salary. The average employee contribution rate of 401 (k) was 8.7% for the third quarter of this year.

Here are some additional conclusions from Fidelity's analysis of the 22 million savers 401 (k) and 403 (b) of its global workplace retirement platform.

• Among the participants enrolled in their 401 (k) plan for 15 years, the average balance was $ 400,300.
• Workers who have been saving for 10 years had an average balance of $ 305,400.
• Young adults are saving too. Millennials who have been investing in their employer plan for five years had an average balance of $ 82,000.

But back to the millionaires 401 (k). Wondering how some people have reached this milestone?

The key factors: time, consistency, investing in stocks and do not panic when the stock market is falling.

People have invested most of their working lives and have not left money on the table, Taylor said.

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"They save at least the 15% that we recommend people save throughout their career, which can be a combination of what they pay out of their paycheck and any equivalent contribution from their employer, "she said. I said.

Even if they bought a house or had children, they faithfully kept the savings. More importantly, they did not let the bear markets – a period of falling stock prices – scare them.

"Even though the market is fluctuating, stocks have always outperformed other types of investments," Taylor said. "And when you think of a 401 (k), especially if you start earlier in your career, you really have time on your side.

By the way, millionaires are not just people earning six-figure wages.

"My husband and I have achieved the status of a millionaire, despite spending most of our careers at public universities and earning a relatively modest salary as a teacher and social worker," Virginia wrote. New York. "The key is to start participating in the retirement savings plan right from your first job and maximize contributions whenever possible. Follow Warren Buffett's Rule of Life on 90% of your after-tax income and save at least 10%. "

One reader wrote that he reached the millionaire mark at the age of 50. His strategy was to make his contributions grow automatically.

"I increased my contributions by 1% each year until I reached the limit," he wrote. "Since I did not have any money as income, I did not miss it."

Trying to hate millionaires? Do not. Follow their example.

Read more:

To retire early or continue working? How to prepare for one or the other choice.

Is $ 1 million enough to retire? Why this point of reference is both real and unrealistic.

Should we retire the concept of retirement?