As entrepreneur Stephen Chen’s mother neared retirement age, she needed to borrow money from Chen – and Chen’s brother – to make ends meet. They desired to help, however the siblings also wanted to seek out a more sustainable, long-term solution that may allow their mother to retire without having to fret about funds.
Chen tried to hunt advice from a financial advisor, but nobody accepted his mother as a client because her net price was not considered high enough. So Chen began constructing spreadsheets and financial models himself and did his best to work out how his mother could live the retirement lifestyle she wanted.
“People like my mother lack the tools to look at their money holistically and strategically so they can make informed decisions, monitor their financial situation, understand which levers to pull and when, and see the connection between the decisions they make today and “In the long term, they can make an impact on their plan,” Chen told TechCrunch. “There is a confluence of factors that could change the future of financial planning and advice.”
After helping his mother cut her expenses, work out when to use for Social Security, when to downsize and take other steps to turn out to be financially independent, Chen realized that many other older Americans faced the identical challenges .
So Chen founded NewRetirement, a Mill Valley-based company that builds software to assist people create financial retirement plans. According to Chen, NewRetirement’s direct-to-consumer products today support financial planning for 70,000 users who manage nearly $100 billion in their very own financial plans.
“Our models go beyond savings and investments to consider all other factors in a person’s life, from home equity, health care costs and taxes to Medicare and Social Security,” Chen said. “Every time a user makes a change, we run thousands of simulations to help them optimize their plan…We consider thousands of different scenarios and enable users to confidently map accumulation and decumulation forecasts with digital guidance.”
NewRetirement is Chen’s second startup after Embark, a web-based college search and admissions tool he launched in 1995. And like Embark, Chen sees NewRetirement as a digital solution to a transition that hundreds of thousands of Americans are facing.
“120 million Americans over 50 own 80% of the wealth in this country,” Chen said, “but lack of money remains a top 10 fear, and nearly half of Americans say they worry about it.”
NewRetirement’s platform uses predictive modeling and data evaluation to assist users determine the proper savings approaches. Photo credit: NewRetirement
In fact, the vast majority of Americans – as much as 65% are pro Charles Schwab’s Modern Wealth Survey 2023 – do not need a proper financial statement. And while 37% of respondents say they work with a financial advisor, two-thirds of Americans imagine their financial planning needs improvement Northwestern Mutual’s 2023 Planning and Progress Study.
NewRetirement, which began as a consumer offering and expanded to businesses in 2021, charges $120 per yr for access to a set of tools, calculators, recommendations and scenario comparisons and about $1,500 per yr for check-ins with a licensed financial planner . Additionally, NewRetirement sells a subscription-based, private label version of its tools for financial advisors.
Now it’s possible you’ll be asking yourself: What sets NewRetirement aside from startups like Retirable, which also offer a variety of retirement planning tools and access to wealth managers? Chen claims that NewRetirement is considered one of the few – and maybe only – financial planning platforms that serves each consumers and advisors and businesses.
“Our core innovation is to enable anyone to build a plan with industry-grade tools, enable consultants to collaborate with the end user, and make this available at scale through enterprise partners who make it available to their customers,” Chen said. “As more financial services corporations find that their offerings reminiscent of investment management have gotten commoditized, there’s great value in helping customers and prospects think holistically about their money. By offering their customers self-directed digital planning as a substitute of starting with a human advisor, they will scale and serve any variety of users, learn more about them, help them make good decisions, and position their services and products more effectively. “
Chen says about 70% of NewRetirement’s revenue currently comes from businesses, while the remaining 30% comes from individuals. The platform has 20,000 individual subscribers and “several” wealth management customers, in addition to “several” corporate customers, including Nationwide, which recently expanded an existing partnership with NewRetirement.
This dynamic undoubtedly helped NewRetirement close its Series A funding round this month.
The company raised $20 million in a single tranche, bringing the whole raised to $20.8 million. It is led by Allegis Capital with participation from Nationwide Ventures, Northwestern Mutual Future Ventures, Plug and Play Ventures, Motley Fool Ventures and others. Chen says the money injection might be used to expand NewRetirement’s 50-employee enterprise products, increase onboarding, speed up research and development efforts and construct capability to satisfy future demand.
“With this new capital, we will have three to four years of runway,” Chen said. “This gives us time to further expand our corporate partnerships and improve our product. Additionally, the current downturn allows us to attract incredible talent. We have a strong team and will continue to expand the number of employees this year.”
