When entrepreneur Stephen Chen's mother began to approach retirement age, she was forced to borrow money from Chen and Chen's younger brother to make ends meet. They wanted to help, but they also wanted to find a more sustainable, long-term solution so her mother could retire without financial worries.
Chen tried to get guidance from financial advisors, but no one was willing to accept her mother as a client because her mother's net worth was not considered high enough. So Chen started building spreadsheets and financial models on her own, doing her best to figure out how her mother could live the retirement lifestyle she wanted.
“People like my mother don't have the tools to look at their money holistically and strategically, so they can make informed decisions, monitor their finances, and decide which levers to pull and when. “They can understand what they should do and connect today's choices with long-term choices. It can impact their plans,” Chen told TechCrunch. “There are confluence of factors that could change the future of financial planning and advice.”
After helping her mother reduce expenses, figure out when to claim Social Security, decide when to downsize her business, and take other steps to become financially independent, Chen decided to found that many older Americans face the same challenges.
So Chen founded NewRetirement, a Mill Valley-based company-building software that helps people create financial retirement plans. Chen said NewRetirement's direct-to-consumer products currently have 70,000 users managing his nearly $100 billion in their own financial plans.
“Our model goes beyond saving and investing and considers all other factors in an individual's life, from home equity, medical expenses and taxes to Medicare and Social Security,” Chen said. Ta. “We run thousands of simulations to help users optimize their plans every time they make a change. We consider thousands of different scenarios and give users confidence using digital guidance. It allows you to plan cumulative and de-cumulative forecasts.
NewRetirement is Chen's second startup after Embark, an online college search and admissions tool he launched in 1995. And like Embark, Chen sees his NewRetirement as a digital solution to the transition facing millions of Americans.
“The 120 million Americans age 50 and older control 80% of this country's wealth,” Chen said, “but running out of money remains a top ten concern. “Nearly half of Americans say they're worried about that.”
NewRetirement's platform uses predictive modeling and data analysis to help users find the right savings approach. Image credit: NewRetirement
In fact, the majority of Americans (as much as 65%) don't have a formal financial plan, according to Charles Schwab's 2023 Modern Wealth Survey. Additionally, while 37% of respondents say they work with a financial advisor, two-thirds of Americans do not have access to a financial advisor for their financial planning, according to Northwestern Mutual's Planning and Progress Survey 2023. He believes there is a need for improvement.
NewRetirement began as a consumer service and expanded to businesses in 2021, offering access to a suite of tools, calculators, recommendations, and scenario comparisons for $120 a year, and check-ins with a certified financial planner for $1,500 a year. A fee will be charged. In addition, NewRetirement sells a subscription-based, private label version of the tool to financial advisors.
Now, you may be wondering what makes NewRetirement different from startups like Retirable, which also offer access to retirement planning tools and wealth managers. Chen claims that NewRetirement is one of the few, and perhaps the only, financial planning platforms that serve not only consumers but also advisors and workplaces.
“Our core innovation is by empowering anyone to create a plan using the industry's most powerful tools, by empowering advisors to collaborate with end users, and through our enterprise partners who bring it to their customers. It's about making it available at scale,” Chen said. “As more financial services companies consider services like investment management to be commoditized, there is great value in helping customers and prospects think holistically about their money. Rather than starting with an advisor, we give our clients self-directed digital planning, allowing them to serve any number of users at scale, learn about them, help them make better decisions, and products and services more effectively.”
Currently, about 70% of NewRetirement's revenue comes from businesses, with the remaining 30% coming from consumer customers, Chen said. The platform has 20,000 individual subscribers and “several” wealth management customers, as well as “multiple” corporate customers, including Nationwide, which recently expanded its existing partnership with NewRetirement.
No doubt this momentum helped NewRetirement secure a Series A funding round this month.
The company raised $20 million in tranches, bringing its total funding to $20.8 million, led by Allegis Capital with participation from Nationwide Ventures, Northwestern Mutual Future Ventures, Plug and Play Ventures, Motley Fool Ventures and others. Chen said the capital injection will be used to expand NewRetirement's 50-employee enterprise offerings, expand onboarding, accelerate research and development, and build capacity to meet future demand.
“With this new capital, we will have a runway of three to four years,” Chen said. “This has given us time to continue to expand our enterprise partnerships and strengthen our products. Additionally, the current economic downturn has allowed us to bring in great talent. We have a strong team. We plan to further expand our workforce this year.”