WASHINGTON — The millionaire next door could very well be a co-worker sitting in the next cubicle.

The number of employees able to reach millionaire status in their workplace retirement plans has hit record levels.

In its latest retirement report, Fidelity Investments said the number of 401(k) participants who had $1 million or more in plans the company manages increased to an unprecedented 196,000, up from 180,000 at the end of the first quarter. The number of IRA millionaires increased to 179,700, also a record high.

Vanguard Investments also saw a spike in the number of millionaires. As of June 30, Vanguard reported about 55,900 401(k) millionaires, up 37 percent from 40,700 at the end of 2018. There were 126,800 IRA millionaires in the second quarter.

And there was a record-setting jump in the number of millionaires investing in the Thrift Savings Plan, the federal government’s version of a 401(k), as well. As of June 28, there were 37,612 TSP millionaires, up from 32,638 in the previous quarter, according to the Federal Retirement Thrift Investment Board. Year-over-year, the number of TSP millionaires increased more than 38 percent.

It was looking a little bleak for 401(k) and TSP millionaires at the end of 2018, with many retirement plan participants falling below seven-figures. But stock market gains in the beginning of this year pushed the numbers up again to record territory.

The number of 401(k) millionaires is a small figure compared with the total number of participants in the plans. Still, crossing the millionaire threshold 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 been contributing to his or her plan for 28 years. In terms of salary, 25 percent of 401(k) millionaires make $161,000 a year or less.

The millionaires don’t let the daily gyrations of the stock market or fears of a recession take them off their game. They keep investing even through market volatility. In fact, they tend to have a higher percentage of their retirement account in equities. On average, they have 75 percent of their savings in stocks. They contribute an average of 16.2 percent of their salary.

And, they don’t panic, said Meghan Murphy, a vice president for Fidelity.

Murphy said the millionaires also take advantage of the resources and guidance provided by their plans.

“The millionaires are do-it-yourself investors,” she said. “They make sure their asset allocations are on track. They understand that retirement is a long-term savings journey.”

I’m hearing from a lot of readers who are worried about the possibility of a recession. They want to greatly reduce their equity holdings. But doing so could mean missing out on the upswings of the market.

Vanguard analyzed the personal performance of more than 58,000 self-directed IRA account holders from the end of 2007 through the end of 2012.

“For the most part, investors fared reasonably well by choosing low-cost investments and staying the course, even in the midst of a turbulent investment period,” the analysis showed. “However, a subset of accounts did not fare as well: Those who ‘changed course’ and exchanged money between funds. … Some of the exchanges were surely reactions to market events, and these investors paid a price for failing to maintain portfolio discipline.”

It’s important for investors to understand that their daily account balance may fluctuate, said Jessica Emery, a spokeswoman for Vanguard.

“However, the odds will remain in your favor, even during volatility, if you maintain a diversified mix of assets in your portfolio over the long term,” she said.

If you’re not sure what to do, or you think you’ll be inclined to panic, it might be better for you to pick a broad-based balanced fund or target-date fund, Vanguard recommends.

While becoming a millionaire is a major milestone, it doesn’t mean you have to join the club to have a secure retirement. How much you’ll need to retire is based on your individual needs. But the fact that some workers are amassing so much money in their workplace plans should be encouraging.

This year, the maximum employees can contribute to their workplace plan is $19,000. If you’re older than 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. This amount may not be achievable for you, but aim for it, anyway.

If you’ve got time on your side and patience, there’s a good chance you can become a millionaire, too.

Michelle Singletary can be contacted at c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071 or  michelle.singletary@washpost.com.

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