Although Senator Elizabeth Warren failed to win the 2020 Democratic Presidential nomination, Senator Warren from Massachusetts is still a very wealthy woman. Despite running on a platform to heavily tax wealthy individuals and corporations, Elizabeth Warren herself is part of the top 1% wealthiest people in America. Let's analyze Elizabeth Warrnen's net worth and income.
According to public financial disclosure forms filed with the federal election officials in February 2019, Warren and her husband have a combined net worth between $6 million and $11 million.
In 2021, her net worth is likely closer to $12 million given the S&P 500 grew by 31% in 2019 and 16% in 2020. Further, the housing market has also done well and is strong than ever post pandemic. Given Elizabeth Warren owns stocks and real estate, she has benefitted immensely from the post-pandemic boom.
Elizabeth Warren's Net Worth Is Purposefully Opaque
When filing public financial disclosure, wealthy politicians purposefully make their net worth range as wide as possible on the downside in order to ingratiate themselves with the common people of America.
After all, Senator Warren has shaped her political brand around fighting capitalism and reining in wealth inequality. By having too high a net worth, Senator Warren will lose a lot of credibility if people realize she is a deca-millionaire. But the fact of the matter is, Elizabeth Warren's net worth puts her in the top 1% of households in America.
With the average net worth in America ranging from $302,000 according to one Credit Suisse study in 2014 to $692,100 according to the Federal Reserve's latest Consumer Finance Study, it's clear that Elizabeth Warren and her husband are doing fantastic.
Given character and honesty are of the utmost importance for a politician to win, Elizabeth Warren can't lie on her public financial disclosure forms. As a result, it's highly likely her household net worth is closer to $12 million, if not even higher.
Breaking Down Elizabeth Warren's Net Worth
Below are some of Elizabeth Warren's assets that make up her reported $4 million to $11 million net worth. Again, Elizabeth Warren's net worth is likely closer to $11 million.
- Primary residence in Cambridge, MA. Her home is assessed at $1.9 million. It is a three-story Victorian era house in a very nice part of town.
- Investment and retirement accounts. The couple's largest holdings are the ultra-safe TIAA-CREF Traditional fund, in which they each have at least $1 million. They have multiple other investment accounts.
- Bank accounts. They have between $367,000 and $830,000 in various banks, according to her 2013 financial disclosure document.
- Book deals. Warren got an advance of $525,000 to write “A Fighting Chance.” The book chronicles Warren's rise from a struggling childhood where her dad was a janitor to the Senate.
- Book royalties. Warren also receives ~$60,400 in royalties for previously published books on bankruptcy and credit.
- A massive annuity. According to the NY Times, Ms. Warren has between $500,000 and $1 million in an annuity. Capitalizing the value of her annuity using a 7% interest rate reveals that Ms. Warren's annuity is worth between $7 million – $14 million alone.
Elizabeth Warren's Annuity Is Very Valuable
Elizabeth Warren's large annuity is the main reason for her wide net worth range in her public filing. She may be arguing that analysts should really use a 10% or higher interest rate to value her annuity.
Even with a 10% interest rate, her $500,000 – $1 million annuity is worth between $5 million to $10 million. In other words, one needs $5 million to $10 million at a 10% interest rate to generate $500K to $1 million a year in annuity income.
The stock market has returned 8% – 10% on average since 1926, but nobody in their late 60s would invest 100% of their investments and retirement savings in the stock market.
Instead, a typical 60-70 year old might only have 30% – 40% of their investments in the stock market following a traditional asset allocation model, bringing their potential average return down to 6% – 7%.
But even a 6-7% annual return is aggressive in a low interest rate environment. Look at how underfunded pensions are because they assumed 7%+ returns.
Elizabeth Warren's Past And Present Income
The Warrens earned $981,000 in 2009 and $955,000 in 2010, according to tax returns she released while running for office.
While at Harvard, Elizabeth Warren reported she earned a salary of $430,000 from for 2010 and part of 2011. In 2011, the couple's total income was $616,000, putting them in the top 1% of household income earners.
As a U.S. Senator, Elizabeth Warren currently earns $174,000, putting her in the top 10% of household income earners as an individual.
Elizabeth Warren released her tax return for 2018, reporting that she and her husband paid more than $200,000 in taxes on a joint income of about $900,000 last year. Her husband is a Harvard Law School professor who made $400,000.
Future book deals will likely continue to allow Senator Warren to make a high income.
Democratizing Access To Investment Opportunities
Warren is a proponent of democratizing access to investment opportunities, such as with real estate crowdfunding. After the passage of the 2012 JOBS Act, real estate crowdfunding has democratized access to commercial real estate investing that was once available only to ultra-high net worth individuals and institutions.
Fundrise is the best platform today that allows you to strategically invest in some of the best commercial real estate deals. As more Americans migrate away from the expensive coasts, there should be opportunity to invest in heartland real estate with lower valuations and higher cap rates. Real estate is one of the most tried and true ways to build great wealth in America.
The opportunities to make lots of money for Elizabeth Warren are endless, especially if she gets far in the primaries.
Elizabeth Warren Controversy
Although Senator Warren is a champion of the people, her claim to be Native American has infuriated many, especially underrepresented minorities. As a minority myself, it feels wrong for a white person to use us to try and get ahead.
Since 1986, Elizabeth Warren has claimed to be Native American, as highlighted on her State Bar Of Texas identification card below.
Did Senator Warren try to give herself a competitive edge by claiming Native American status. Or did she really did believe she was Native American until she was called out by her opposing Senator candidate in 2011. I think the answer is clear. She tried to be the most underrepresented minority to get ahead.
Given Elizabeth Warren doesn't look Native American nor did her DNA test in 2018 come back with more than a 1/1,032 trace amount of Native American heritage, some Americans feel she deceived the public.
Warren's Native American issue will likely come back to haunt her today.
Manage Your Wealth Wisely
If you want to get as rich as Elizabeth Warren, it's best you diligently track your net worth and invest your money wisely. Check out the award-winning, free financial tool by Personal Capital to track your finances.
With Personal Capital, you can analyze your investments for excessive fees. You can also better plan for your retirement. I've been using Personal Capital since Elizabeth Warren was making over $600,000. Since that time, I've seen my net worth surpass hers without a massive platform.
About the Author:
Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing. He spent 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate.
In 2012, Sam was able to “retire” at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income. He spends time playing tennis and being a good father to his two young children. You can sign up for Financial Samurai's free financial newsletter here.