Vanguard Investments also saw an increase in the number of millionaires. As of June 30, Vanguard reported 55,900 401 (k) millionaires, up 37% from 40,700 at the end of 2018. There were 126,800 IRA millionaires in the second quarter.
And there was a record jump in the number of millionaires investing in the Thrift Savings Plan (TSP), the federal government's version of a 401 (k), too. As of June 28, there were 37,612 TSP millionaires, up from 32,638 last quarter, according to the Federal Retirement Thrift Investment Board. Year over year, the number of TSP millionaires increased more than 38%.
It looked a bit bleak for 401
The number of 401 (k) millionaires is a small number compared to the total number of participants in the plans. Still, crossing the millionaire boundary is a great investment achievement. It's worth noting because of how people got there.
At Fidelity, which is the largest administrator of 401 (k) plans, the average millionaire has contributed to his plan for 28 years. When it comes to payroll, 25% of 401 (k) millionaires earn $ 161,000 a year or less.
Millionaires do not let the daily gyrations in the stock market or fears of a recession take them out of the game. They continue to invest through market volatility. In fact, they tend to have a higher percentage of the pension account in equities. On average, they have 75% of their savings in shares. They contribute an average of 16.2% of their salary.
And they don't panic, said Meghan Murphy, vice president of Fidelity.
Murphy said that millionaires also utilize the resources and guidance as their plans.
"The millionaires are do-it-yourself investors," she said. "They make sure the asset allocation is on track. They understand that retirement is a long-term savings journey."
I hear from many readers who are concerned about the prospect of a recession.
Vanguard analyzed the personal performance of more than 58,000 self-managed IRA account owners from the end of 2007 to the end of 2012.
“For most people, investors did reasonably well by choosing low cost investment and keeping track, even in the midst of a turbulent investment period, "the analysis showed." However, a subset of accounts did not go as well: Those who "swapped courses" and switched funds between funds. … and these investors paid a price for not maintaining portfolio discipline. "
It is important for investors to understand that their day-to-day account balances may dwindle ge, says Jessica Emery, a Vanguard spokeswoman.
"However, the odds will remain in your favor, even under volatility, if you maintain a diversified mix of assets in your portfolio over the long term," she said.
If you are not sure what to do or if you think you are likely to panic, it may be better for you to choose a broad balanced fund or target date fund, Vanguard recommends.
While becoming a millionaire is an important milestone, it does not mean that you have to join the club to have a secure retirement. How much you need to withdraw is based on your individual needs. But the fact that some workers raise so much money in the workplace plans should be encouraging.
This year, maximum employees can contribute to their $ 19,000 workplace. If you are over 50, there is a collection provision that allows you to contribute an additional $ 6,000 for a total contribution of up to $ 25,000 to a retirement plan sponsored by the employer. This amount may not be achievable for you, but aim for it anyway.
If you have time on your side and patience, there is a good chance that you too can become a millionaire.