Retired FinTech startup Lilly to offer credit card rewards to IRAs

A company-backed startup has launched a new app for Americans to rollover money into an Individual Retirement Account: transferring cash bank rewards directly into a traditional or Roth IRA.

“It’s a set-it-and-forget-it retirement safety net that sits right under you and doesn’t change your behavior,” says Kori Handy, Founder and VP of Product and design for Lilly Fund. “You can actually have terrible spending habits and still save for retirement whether you like it or not.”

Handy says Lilly launched its app in late October and has a few thousand users, as well as a waiting list of 25,000 people. The company, which Handy says is operating with around $2.5 million in seed funding, is partnering with an investment platform Atomic Invest Inc to provide users with an IRA and plans for other investment options like direct stock and bond purchases.

Lilly, which is backed by a venture capital firm Avalanche Resume and other angel investors, is positioning itself as a new player in the retirement space that can help Americans save, regardless of income level or access to an employer-sponsored retirement plan. The goal, says Handy, is reminiscent of the efforts of employers and policy makers who have long sought ways to increase the retirement savings of American workers.

Lilly isn’t alone in offering immediate cash back for retirement savings, with some financial companies offering cards that will automatically put cash back into a 529 retirement, brokerage, or college savings account. Closer to Lilly’s model is a company called EvoShare, which has in partnership with companies including 401(k) platform provider Money Intelligence to provide cash-based retirement savings to more than 10,000 participating businesses.

Lilly’s competitive advantage, according to Handy, is that the Lilly app is bank independent and can work with almost any financial service with a rewards program. It also touts the educational nature of the app, which monitors a user’s cash back, spending habits, bills and transactions, as well as a compound interest calculator to show how a few dollars saved can go a long way. add up to when someone is ready to retire. .

“It’s really powerful when people see the strength of compounding just wasting a few dollars here and there,” he says.

Asked about working with pension plan advisors, Handy says it’s something in the spirit of the company. They are thinking about how a referral model could work to partner directly with pension advisors as well as employers.

Current Lilly users are on a beta platform and have free access. Going forward, Lilly will be a subscriber-based app, Handy says, but it’s not yet set on the final pricing model. For now, Lilly is considering three different service tiers, including free, $2.99 ​​per month, and $7.99 per month.

Users can sign up by searching for “Lilly Retirement” in their app store. The company’s website has a waiting list to sign up by taking email addresses.

Handy and the other founders – CEO Amanda Fenn and engineer Jeremy Kotai – have previously worked at technology companies such as PayPal, Intuit and Microsoft.

Handy says the desire to start Lilly was partly because his own mother was retiring and didn’t have enough savings or regular income to get by. She now lives with him in his Seattle-area home while he works to launch a business whose mission is to help “massively underserved middle- and low-income people save for retirement.”

About 57 million workers in the private sectoror 46% of the industry’s workforce, do not have access to an employer-sponsored retirement plan, according to the Georgetown University Center for Retirement Initiatives.