A psycho-financial analysis of Harriet Miers.

A psycho-financial analysis of Harriet Miers.

A psycho-financial analysis of Harriet Miers.

Moneybox
Commentary about business and finance.
Oct. 20 2005 12:31 PM

Miers and Her Money

A psycho-financial analysis of the Supreme Court nominee.

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Mier'd in financial woes?

What does Harriet Miers' money tell us about her? The Supreme Court nominee has filed financial disclosure forms for the last five years as a requirement for her White House job. The most remarkable fact that emerges from her filings is this: She managed to work for nearly 30 years as an attorney in private practice without getting rich. Chief Justice John Roberts—whose psycho-financial biography you can read here —amassed a fortune worth at least $3 million and probably much more; Miers finds herself at age 60 with a net worth of about $675,000, which unfortunately does not make her wealthy.

Miers, like many of her fellow Americans, has not saved enough for retirement. According to her latest financial filing, submitted last week, Miers' IRA contains about $207,000, a sum that would fund comfortable golden years for a cocker spaniel, perhaps, but not an average American, even a single one (at a typical 5-percent-per-year withdrawal rate, Miers could spend only about $10,000 annually, pre-tax). Her investing strategy also shows her to be excessively cautious. She has invested her nest egg mainly in cash and Treasuries and is therefore in grave danger from inflation. In today's environment, Miers' IRA probably generates a paltry real return of about 1 percent a year.

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Like many Americans, in other words, Miers will depend on her Social Security benefits and/or will need to keep working well past the national retirement age. Also like many Americans, she appears to have raided her retirement funds to cover current expenses.

When Miers left Dallas law firm Locke Liddell in 1999—and the $624,000 salary she earned as a managing partner—her IRA (then a firm profit-sharing account) contained between $500,000 and $1 million. Every year since, however, this account balance has mysteriously declined, so much so that it now totals the aforementioned $207,000. It is possible that, in typical American fashion, Miers has mortgaged her future to maintain the lifestyle she enjoyed when she was earning $624,000, instead of the one she should be restricted to now that she gets a government salary of $161,000. But such profligacy seems unlikely, based on the rest of Miers' disclosures.

She's certainly not wasting the IRA money on housing. Miers owns a house in Dallas valued at $688,000 and a condo in Virginia valued at $295,000. It might be easy to mistake $1 million of property as evidence of a taste for extravagance, but with the ballooning real-estate prices of recent years, it isn't. Assuming Miers is reporting her property values at today's prices (instead of at cost), her housing investment is modest. Indeed, the Wall Street Journal reports that her Virginia pad encompasses all of 964 square feet. (She also owns a "vacant lot" in Dallas, estimated to be worth $7,500.)

In typical American fashion, Miers has financed her two residences with mortgages, taking advantage of low interest rates and the mortgage tax deduction. Sensibly and conservatively, she does not appear to have succumbed to the current fad for negative-amortization or adjustable-rate interest-only loans, debt bombs that could blow the personal finances of many homeowners to smithereens. Miers' mortgages amount to a reasonable 53 percent of the equity value in her properties, providing a cushion if rates spike and real-estate values tank. Dumping one of her houses would improve Miers' retirement picture, but it wouldn't save the day.

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Nor is Miers extravagant in other ways. The Journal reports that she drives an "older-model Mercedes," and her disclosure form values her cars and other personal property at a grand total of $35,000. No Monets, sloops, or cavernous wine cellars here.

So, where has all that retirement money been going? Perhaps to another expense category depressingly familiar to most Americans: health-care costs. According to the Journal and AP, Miers is the primary caretaker for her 91-year-old mother, who has required in-home and nursing-home care since the mid-1990s. That a decade of her mom's health care could consume several hundred thousand dollars set aside for Miers' own retirement won't come as a surprise to anyone who has had (or paid for) a long-term illness in recent years.

Judging from her financial statements, the difference between Miers' brand of conservatism and the kind exemplified by many of the ex-private-sector moguls who employ her is that it seems truly compassionate, in the sense that Miers seems to be sacrificing some of her own lifestyle and financial security for the benefit of others. If Miers sits on the Supreme Court until she's 75—or trades her newfound fame for a humongous salary somewhere else—her retirement will be plush, irrespective of her currently depleted IRA. A Supreme Court pension and speaking engagements will guarantee it. This said, Miers' financial situation does reveal an interesting irony: Without the late-career, Hail Mary to the court, she would have to work well into her 70s. She has no husband or children to care for her. Absent the Supreme Court boost, the retirement of this well-educated, hardworking, self-reliant, and frugal American would be funded primarily by a liberal government program that some of her conservative colleagues would love to abolish: Social Security.

Henry Blodget is the founder, editor, and CEO of Business Insider. Follow him on Twitter.