When businessman Stephen Chen's mother began approaching retirement age, she had to borrow money from Chen – and Chen's brother – to make ends meet. They wanted to help, but the siblings also wanted to come up with a more sustainable, long-term solution that would help their mother retire without having to worry about finances.
Chen tried to get guidance from a financial advisor, but no one would accept his mother as a client because her net worth was not high enough. So Chen started creating spreadsheets and financial models himself, doing his best to figure 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 when, and make the connection between the choices they make today and long-term choices,” Chen told TechCrunch. Their plan.” “There are a host of factors that may change the future of financial planning and counseling.”
It was after Chen helped his mother cut her expenses, know when it was time to claim Social Security, decide when to downsize and take other steps to become financially independent, that Chen realized that many other older Americans were facing the same challenges.
So Chen founded NewRetirement, a Mill Valley-based company that builds software to help people make financial retirement plans. Today, NewRetirement's direct-to-consumer products support financial planning for 70,000 users who manage nearly $100 billion in their own financial plans, according to Chen.
“Our models go beyond savings and investments, taking into account all the other factors in a person's life, from home ownership, 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 refine their plan… We take into account thousands of different scenarios, allowing users to confidently draw and build backlog forecasts with digital guidance.”
NewRetirement is Chen's second startup after Embark, an online college search and admissions tool he launched in 1995. Like Embark, Chen sees NewRetirement as a digital solution to the shift facing millions of Americans.
“The 120 million Americans over the age of 50 own 80% of this country’s wealth,” Chen said. “But running out of money remains a top 10 fear, with nearly half of Americans saying they are worried about it.”
The NewRetirement platform uses predictive modeling and data analytics to help users discover the right savings tactics. Image credits: New Retirement
In fact, the majority of Americans—up to 65%, according to Charles Schwab's 2023 Modern Wealth Survey—do not have a formal financial plan. And while 37% of respondents say they work with a financial advisor, two-thirds of Americans believe their financial planning needs improvement, according to Northwestern Mutual's 2023 Planning and Progress Study.
NewRetirement, which started as a consumer offering and expanded in 2021 to include enterprise, charges $120 a year for access to a suite of tools, calculators, recommendations and scenario comparisons and about $1,500 a year for check-ins with a certified financial planner. In addition, NewRetirement sells a subscription-based version of its tools targeted to financial advisors.
Now, you may be wondering, what makes NewRetirement different from startups like Retirable, which similarly provide a suite of retirement planning tools and access to asset managers? Chen emphasizes that NewRetirement is one of the few — and perhaps the only — financial planning platforms that serves consumers as well as advisors and workplaces.
“Our core innovation is allowing anyone to create a plan using industrial strength tools, enabling advisors to collaborate with the end user and making this widely available through enterprise partners who deliver it to their clients,” Chen said. “As more financial services firms see their offerings like investment management becoming commoditized, there is great value in helping clients and prospects think about their finances holistically. By offering clients self-directed digital planning rather than starting with a human advisor, they can scale and serve any A number of users, getting to know them and helping them make good decisions and position their products and services more effectively.
Currently, about 70% of NewRetirement's revenue is enterprise, while the remaining 30% comes from consumer clients, Chen says. The platform has 20,000 individual subscribers and “multiple” wealth management clients as well as “multiple” institutional clients including Nationwide, which recently expanded its existing partnership with NewRetirement.
This momentum undoubtedly helped NewRetirement secure its Series A funding round this month.
The company raised $20 million in a tranche to bring its total raised 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 says the cash will be used to expand NewRetirement's 50-employee organization's products, expand enrollment, accelerate R&D efforts, and build capabilities to meet future demand.
“With this new capital, we will have three to four years of runway,” Chen said. “This gives us time to continue expanding our corporate partnerships and improving our products. Furthermore, the current downturn enables us to bring in amazing talent. We have a strong team and will be expanding headcount this year.”
