Social Security Protection Company Raises $ 9.4 Million to Help Protect Retiree Finances
Retirement / Social security
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You’ve probably heard of the uncertainty surrounding Social Security benefits, which could be cut sooner than expected if Congress doesn’t address the program’s long-term funding gap. A company called PlanGap has it – and it aims to ensure that Americans are financially protected in case their Social Security checks are reduced.
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PlanGap defines itself as a âproduct innovation companyâ to help retirees plan for potential reductions in their benefits. On Monday, December 13, the Atlanta-based company raised $ 9.4 million in a Series A funding round to support its mission to bring more Social Security protection products to market. The round was led by early stage venture capitalist Cultivation Capital and also included leaders from the insurance, reinsurance, finance and insurtech industries.
PlanGap, founded in 2017, will use the money to create a line of ‘trigger-based’ annuity and life insurance products – essentially, retirement insurance – that it says will solve previously unresolved financial issues for retirees. Through collaborations with insurance companies and distribution partners, PlanGap’s products aim to protect retirees from disruption of retirement income, including reduced social security payments.
âThe average household expects to receive nearly $ 1 million in lifetime Social Security benefits, and for the vast majority of Americans, these benefits are the foundation of their retirement income plan,â said the founder and PlanGap CEO David Duley in a press release. “They want and deserve a way to protect their promised benefits to be used as political football.”
It highlights the federal government’s projections that the Social Security Administration may have to cut benefits by 24% by 2033. As GOBankingRates previously reported, this is a year ahead of schedule, mainly because the economic downturn caused by the COVID-19 pandemic has contributed to a sharp drop in employment that has resulted in lower payroll tax revenue.
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With so many uncertainties about benefits, PlanGap believes there is a ready market for retirement insurance. The company has already established partnerships with several insurers, including Sammons-North American, Annexus, Ash Brokerage and Insurex.
Cultivation Capital officials seem equally optimistic about PlanGap’s prospects.
âPlanGap’s intellectual property, technology and product designs have enabled the insurance industry to offer Americans new opportunities for control and peace of mind in planning their retirement income,â said Cliff Holekamp, ââCo-Founder and Managing Director of Cultivation Capital, who joined PlanGap Board of Directors. “Soon every prudent financial planner in America will need to make sure their clients’ Social Security income promises are protected by PlanGap.”
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