WASHINGTON — You work all your life hoping to reach this milestone.

Then it happens. You finally get into the 401(k) millionaire’s club – at least on paper. Although taxes may technically keep you from netting $1 million, you’ve still achieved what many others only dream about. You’re a millionaire, but not because you got lucky. Rather, you made contributions for more than 30 years to your retirement account, giving you entree into an elite club. Or you achieved millionaire status by participating in the Thrift Savings Plan (TSP), the federal government’s version of a 401(k).

For the last decade, as the stock market roared, an increasing number of employees saved their way into millionaire status. But what the stock market gives, it also takes away. Volatility at the end of 2018 booted a lot of those workers out of the millionaire’s club.

Fidelity Investments reported that for the fourth quarter of 2018, there was a 28.6 percent drop in the number of 401(k) millionaires. The number of people with $1 million or more in their 401(k) employer plans declined to 133,800, down from 187,400 in the third quarter, according to Fidelity, one of the country’s largest administrators of workplace retirement accounts.

As of Dec. 31, there were 21,432 TSP millionaires, a decline from 34,128 reported at the end of September, according to the Federal Retirement Thrift Investment Board.

“December was brutal,” said one Virginia reader whose account dropped down to six figures. “I try to keep this volatility in perspective and appreciate that I still have a healthy balance, despite the fluctuation. Sometimes I don’t look when the market goes nuts, but I found that checking it helped me feel secure that it was not going to vanish completely.”

Other investors expressed the same sentiment. Tipping out of the millionaire zone hasn’t discouraged them from staying the course.

“My 401(k) has dropped to $997,000,” said Grant S., a software developer from Massachusetts whose account is administered by Fidelity. “At the lowest point, it was off close to $100,000. I’ve been through a couple of market downturns over the years and learned that all you can really do is grimly hold on.”

The third quarter of 2018 marked the 10-year anniversary of the beginning of the financial downturn, and things were looking pretty good for retirement investors. Average account balances hit a record high, as did the number of millionaires who achieved that status in their workplace retirement accounts.

But then came the storm. President Trump started his trade war with China. Investors worried about economic slowdown in the U.S. and abroad and the Federal Reserve continued inching up interest rates.

The average account balances for various retirement accounts – 401(k)s, 403(b)s and IRAs – were down from record highs. The year-over-year average balance for 401(k) accounts decreased to $95,600, an 8 percent drop from $104,300. The average tax-exempt 403(b) account balance fell to $78,700, down from $85,100. And the average IRA balance decreased from $106,300 to $98,400.

If you’re investing for the long term, the key is to not panic when the market goes through a downturn, said Meghan Murphy, vice president at Fidelity.

“As the market went down, the millionaires didn’t shy away from equities,” Murphy said. “About 98 percent of people continued to contribute through the volatility. So as the recovery comes, you have more shares and it will benefit you.”

Investors recently got a boost to their portfolios following news from the Federal Reserve that it was taking a pause in raising interest rates. Stocks ended the month on a high with spikes in both the Dow Jones Industrial Average and S&P 500, which registered its best January performance since 1987.

Effective this year, workers can contribute up to $19,000 annually to a workplace plan such as a 401(k) or TSP. That’s up from $18,500 last year. 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 $25,000 to an employer-sponsored retirement plan.

Murphy said 23.1 percent of millennials are saving the recommended 15 percent in their 401(k), which includes both employee contributions and a company match. Going back five years to the fourth quarter of 2013, only 14.9 percent of millennials were saving 15 percent or more in their 401(k).

The number of 401(k) millionaires in plans administered by Fidelity is a small figure – less than 1 percent. Nonetheless, even with the recent decline, the fact that people can become millionaires within their workplace retirement plans should spread hope to others, especially young adults. It may take you three decades of diligence to reach this status, but it’s doable.

Michelle Singletary can be contacted at:

michelle.singletary@washpost.com. Twitter: SingletaryM

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