The Justices and their Money, Part 1: Kavanaugh

Welcome to the nineteenth post of The Invested Counsel—thoughts about financial planning for young lawyers.

I’ve already explained what I do (and what I don’t do) for investing as a non-practicing attorney.

So now we’ll go to the other side of the profession. This is the first in a series of posts that will examine how the justices of the Supreme Court invest.

How the Supreme Court Justices Invest

Every year, the justices (and lots of other federal officials) file disclosures regarding their income and investments. You can see the most recent disclosures here. The disclosures are not comprehensive; for example, they don’t include the value of the justices’ homes. And the disclosures are imprecise; while the name of each investment needs to be disclosed, the size of the investment is provided within ranges (e.g., $1000 or less, $15,001 to $50,000, $1,000,001 to $5,000,000, etc.).

As a result, we do not have a complete understanding of the justices’ personal financial circumstances. And even if we did, their circumstances are likely different from yours. For example, I’m assuming that job security for most of my readers is not established by Article III of the Constitution. (If your job security is guaranteed by the Constitution, and you need a financial planner, let me know.)

But there is still a lot that we can learn about investing from these disclosures. The goal of this post, and the future posts in this series, is to examine the money issues that apply to all lawyers, either just starting in the profession or at the very top of it.

The Salaries of the Justices

The Federal Judicial Center lists the salaries of the justices going back to 1789, when John Jay, the first Chief Justice, made $4000 per year. Interestingly, for three years, from 1863 to 1866, the justice assigned to (what was then) the Tenth Circuit was given an additional $1000 per year for travel, since the justices still needed to ride circuit at that time, and it was so difficult to get out west. There’s something funny about a Supreme Court justice Oregon Trail-ing it out to the wild west to hear cases, and then having to schlep back to Washington.

Chief Justice Roberts’ salary is currently $320,700 per year ($306,600 per year for the other eight associate justices), which means that the justices earn the same as a second- or third-year associate at a biglaw firm, which makes a lot of sense.

How Justice Kavanaugh Invests (or doesn’t)

I’ll start with Justice Kavanaugh, since his financial disclosures are the shortest of the justices.

Background. He’s 61 years old, is married, and has two high-school/college-age daughters. He has spent most of his career in public service, except for a handful of years in private practice. Before becoming a justice in 2018, he sat on the D.C. Circuit for about 12 years.

Investments. Under “Investments and Trusts,” Justice Kavanaugh has only two entries:

The retirement account, which has less than $15,000 in it, appears to be invested in a Vanguard Institutional Index Fund, which is a good investment. For example, VIIIX (Vanguard Institutional Index Fund Institutional Plus Shares) has a low expense ratio (0.02%), and seeks to track the performance of the S&P 500. It largely satisfies The Sentence, which covers my basic investing advice.

But . . . that’s it. Everything else seems to be in accounts at Bank of America, which are most likely just held in cash, since the disclosures do not mention any other investments. The disclosure says that Justice Kavanaugh received between $2500 and $5000 in income on a balance between $100,001 and $250,000, so presumably the cash is in either a high-yield savings account or a money market investment.

To be clear, Justice Kavanaugh is worth more than what is listed above. He owns a home, and is entitled to a pension due to his government service. But it’s still pretty surprising that he does not appear to hold any other investments—especially in light of the disclosures for the other justices. For example, I would have expected to see 529 (i.e., college savings) accounts for Justice Kavanaugh’s daughters.

What’s going on with Justice Kavanaugh’s finances?

It could be a bunch of things.

The disclosures are an incomplete picture into his finances. First, I don’t think that Justice Kavanaugh is hiding something that should obviously be on the disclosures. I haven’t studied the statute that details what needs to be disclosed and what doesn’t, but I don’t think he’s violating the law. That would be too dumb, and too easy.

And as explained above, the disclosures are incomplete. As Kavanaugh wrote in responses to questions he received during the confirmation process:

Finally, it bears repeating that financial disclosure reports are not meant to provide one’s overall net worth or overall financial situation. They are meant to identify conflicts of interest. Therefore, they are not good tools for assessing one’s net worth or financial situation.

He’s not rich; he’s mostly worked for the government. If he had spent more time in private practice, Justice Kavanaugh would certainly have earned far more money than what he made in public service. But he has been steadily employed for a very long time, making a good salary as a judge for twenty years. The fact that Kavanaugh has essentially no personal investments is still fairly surprising.

He’s bad with money. It is possible that he has not been as diligent with saving and investing as the other justices. Of course, there is no way to confirm this based on the disclosures.

His parents are probably very wealthy. His father was a successful lobbyist, who in 2005 earned over $13 million in compensation and a retirement package working for the Cosmetic, Toiletry and Fragrance Association. As an only child, Justice Kavanaugh (and/or his family) has been, and likely will continue to be, the beneficiary of his parents’ financial means.

And that’s totally normal. (Whether that’s a good or appropriate or necessary thing for society is a different question.)

But it does emphasize the fact that your personal finances are inextricably tied to the people around you. One of the first questions I ask clients is about who they can rely on for financial support, and who may need to rely on them for financial support. All else equal, your personal finances will be very different if you will be supporting your parents into old age, or if they will be supporting you as you continue to grow into adulthood.

And ultimately that is what I think is going on. Justice Kavanaugh’s personal finances are likely closely linked to his parents’ finances, and the financial plan in place for his parents likely covers Kavanaugh and his family. For example, grandparents can open up and fund 529 accounts for their grandchildren, which may explain why Kavanaugh doesn’t have those accounts for his daughters. Kavanaugh may or may not himself be involved in the planning there, but there likely is a plan in place for him. We just can’t see it in the disclosures.

That is true for everyone, whether or not they need to disclose their investments to the public. Just because someone looks wealthy, or not wealthy, does not mean that they are actually wealthy, or not wealthy. If I may tap into my past lives in Texas, some people are all hat and no cattle, and some people are all cattle and no hat.

That’s all for now. Have a wonderful week.

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