Retiree FinTech Startup Lilly Sends Credit Card Rewards to IRAs

A venture-backed startup has launched a new app for Americans to defer cash to an individual retirement account: by transferring cash bank rewards directly to a traditional or Roth IRA.

“It’s a retirement safety net that sits right under you and doesn’t change your behavior,” says Kori Handy, founder and vice president of product and design for Lilly Funds. “You can actually have terrible spending habits and you’re still saving for retirement whether you like it or not.”

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

Backed by venture capital firm Avalanche VC and other angel investors, Lilly is positioning itself as a new player in retirement that can help Americans save regardless of income level or access to an employer-sponsored retirement plan. The goal, Handy says, is not unlike the efforts of employers and policymakers who have long looked for ways to increase retirement savings among working Americans.

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

Lilly’s competitive advantage, Handy says, is that the Lilly app is not bank-dependent and can work with almost any financial service that has a rewards program. He also highlights the educational nature of the app, which monitors a user’s cashback, spending habits, bills and transactions, as well as providing a compound interest calculator to show how a few dollars saved can add up when someone is ready to retire. .

“It’s very powerful when people see the power of getting involved from squandering just a few bucks here and there,” he says.

When asked about working with advisers for pension schemes, Handy says that it is something the firm is thinking about. They are considering how a referral model might work to work with pension plan advisers as well as employers directly.

Current Lilly users are in a beta platform and get access for free. In the future, Lilly will be a subscription-based app, says Handy, but it is not yet set on the final pricing model. For now, Lilly is looking at three tiers of different services, including free, $2.99 ​​a month and $7.99 a month.

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

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

Handy says that the desire to found Lilly was partly due to his own mother retiring and not having enough savings or regular income to get by. She now lives with him in his Seattle-area home as he works to start a company with a stated mission of helping “the massively underserved middle- and low-income people save for retirement.”

About 57 million private sector workers, or 46% of the sector’s working population, do not have access to an employer-sponsored retirement plan, according to The Georgetown University Center for Retirement Initiatives.