Financial news and advice — May 2016

The average retired Canadian lives on 62% of the salary they made before retirement, a new study shows. Plus, MasterCard will soon be using facial recognition as security authentication.


Ikea founder's cost-saving tip: flea markets

He may be the world's richest 90-year-old, but Ingvar Kamprad, founder of the Ikea furniture chain, still pinches his pennies. In a TV documentary that aired in his native Sweden earlier this year, Kamprad proudly admits he buys his clothes at flea markets and “wants to set a good example” of thriftiness. Despite having approximately US$42 billion, making him the ninth wealthiest person on earth according to a Bloomberg ranking in March, Kamprad is famously frugal. Not only does he reportedly fly coach and prefer to get his hair cut in developing countries where it’s cheaper, he also likes to save money on taxes. In 1973, he left Sweden for Denmark and later Switzerland in search of lower tax rates, and only returned to Sweden in 2014.


Whiskey win?

Ironworks Distillery 

Small producers of Canadian spirits may get a shot in the arm if a private member’s bill passes. Ben Lobb, MP for Huron-Bruce, Ont., introduced Bill C-232 to amend the Excise Act and lower the so-called “whiskey tax,” currently $11.69 per litre on distilled spirits, to just $6 per litre for the first 100,000 litres produced by any licensee. The bill, which was awaiting second reading at press time, would help the Canadian spirits industry compete globally, Lobb said.


Selfie security

Move over signatures, passwords and PINs — MasterCard will soon be accepting fingerprints and facial recognition (a.k.a. selfies) as security authentication for purchases. The credit card company has already conducted a successful pilot with the technology in Amsterdam and plans to launch it in Canada, the US and parts of Europe this summer.


The magic number: 62

The average retired Canadian lives on 62% of the salary that he or she earned just prior to retirement, according to an Ipsos poll conducted on behalf of Sun Life Financial. Interestingly, the same poll found that 62% of retirees who work with a financial adviser have saved enough money for retirement compared with only four in 10 (38%) who do not have a financial adviser. Makes us wonder if Douglas Adams was hasty in choosing 42, rather than 62, as the Answer to the Ultimate Question of Life, the Universe, and Everything.


Low wage ≠ poverty

The majority of Canadians who earn minimum wage are not poor, finds a Fraser Institute study. “The perception that the typical minimum-wage earner is a single parent struggling to survive does not align with the facts,” says Charles Lammam, co-author of the study. Instead, six in 10 minimum-wage workers are teens or young adults in their first job, who often (85%) live with parents or other relatives in households not considered low-income by Statistics Canada measures.