You’re Gonna Need a Bigger Boat

This is one of the all-time classic lines in the movies. Captain Quint, Police Chief Brody and Hooper are out looking for the Great White Shark in the move Jaws. After the Great White attacks the Orca, Brody turns to Quint and says, “You’re gonna need a bigger boat.” What does this have to do with your financial planning? Quite a bit.


A Bigger Boat


The Orca versus the Great White just wasn’t a fair fight. Quint, ever the brave Captain, went down with his ship. Trust me—you don’t want to be going down with your ship. To get a bigger boat and have a fair fight with your financial plan, you’ll need to do some heavy lifting long before you set sail. We won’t talk about 401(k)’s, IRA’s, and 529 College Savings Plans. We’ve done enough of that in the past. You are either taking advantage of these investment vehicles or you’re not. If you are taking advantage of these plans, you have at least begun to think about your financial future.

If you’re not, don’t look back, just get started. One area that many investors are going to find they need a bigger boat is in the area of medical care costs. Complicating matters is trying to determine where the Affordable Care Act also known as Obama Care will end up. Given the inflation that has occurred with medical care costs over the past decade, it’s difficult to see any end in sight. Medical costs are expected to rise 6.5% in 2014 and 6.8% in 2015¹. This type of inflation can make it very challenging for all investors, particularly retirees that use more medical care.

 A Sturdier Boat


A bigger boat is great and in many cases it may be necessary. However, a sturdier boat would help the captain sleep much better at night. One way to have a sturdier boat is to have reserves. These reserves could be food, water, gas, batteries, flares and extra life preservers. You never know what may happen. Play it safe and go with the Boy Scouts Motto here— be prepared.

With your financial plan, the  first step for retirees is to have a more than adequate cash reserve. During your working years most commentators would suggest having a cash reserve of at least six months. Many investors, however, ignore this guideline and would typically have only two to three months of cash reserves. Retirees should have at least two years of living expenses in cash reserves. Having this reserve, you won’t be forced to sell positions from your investment portfolio if you needed cash. I know having money in cash pays close to zero. Get over it. Interest rates will rise at some point. Keep in mind that this is not about return on investment. It is about return of investment.

The next step is to have adequate life boats in case something goes wrong. This means maintaining adequate life, property and casualty, and long-term care insurance. For folks that are still working they should also consider having appropriate disability insurance. Without having coverage, the Great White may wipe out your entire family’s boat.


Land Sharks


It’s not just the Great White Shark you need to be concerned with. You also need to watch out for a very different kind of shark—the Land Shark. They don’t look like sharks. You won’t see a Hammerhead Shark walking down Main Street…quite the contrary. They tend to dress quite nicely, talk smoothly, and of course have that million dollar smile. The Land Shark’s calling card is the “Stock of the Week”, penny stocks (trading for $5 or less), annuities “that don’t cost anything”, or numismatic coins. His mission is different from the Great White. He is only looking to separate you from your money. Even if you are successful with your voyage on the open ocean and avoiding the Great White Shark—be cautious.   Avoid Land Sharks at all costs. They want to “help” you with your investments. Sure they do. That’s not the type of help you need. Pack your shark repellent and use very liberally.


Bringing Your Ship Home


Hopefully you’re not out on the open ocean on full shark alert. Either way, someday you’ll want to bring your ship in and put down an anchor. Lots of investor’s boats are heading to retirement. It is estimated that 10,000² baby boomers retire every day, almost four million a year. That’s a big number. Are they ready for retirement? Some are and, unfortunately, some aren’t.

The Rolling Stones said, “Time is on my side.” I hope time is on your side. Pre-retirees still have time to right their ship. Get started now. The challenge for retirees is to stay retired and not outlive your portfolio. Someone who retires in their early 60’s could live another 20-30 years in retirement. That’s a long time. To complete the journey make sure you have a bigger and sturdier boat.




While Jaws was an exciting blockbuster movie, your retirement plan shouldn’t be as nerve racking. Let us know if you need any help “getting a bigger boat”. Please call me at (860) 645-1515 or email


Thanks for your referrals!

¹   June 24, 2014

²The Wall Street Journal July 22, 2014


The information contained in this report does not purport to be a complete description of the securities, market or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Thomas F. Scanlon, CPA, CFP® and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. You should discuss your tax or legal matters with the appropriate professional. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.