NewRetirement wants to simplify financial planning for retirement

When businessman Stephen Chen's mother began approaching retirement age, she was forced to borrow money from Chen (and Chen's brother) to make ends meet. They wanted to help, but the brothers also wanted to find 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 accepted her mother as a client because her net worth was not considered high enough. So Chen began 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 analyze their money comprehensively and strategically so they can make informed decisions, monitor their financial situation, understand which levers to pull and when, and make the connection between the decisions they make today and the long term. . ramifications for their plan,” Chen told TechCrunch. “There is a confluence of factors that may alter the future of financial planning and advice.”

It was after Chen helped her mother reduce her expenses, determine when to claim Social Security, decide when to downsize, and take other steps to become financially independent, that Chen realized many other older Americans were facing the same challenges. .

So Chen founded NewRetirement, a Mill Valley-based company that creates software to help people create financial retirement plans. Today, NewRetirement's direct-to-consumer products power the financial planning of 70,000 users who manage nearly $100 billion in their own financial plans, according to Chen.

“Our models go beyond savings and investments, and take into account all the other factors in a person's life, from home values, 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, allowing users to confidently plot digitally guided accrual and decumulation projections.”

NewRetirement is Chen's second startup after Embark, an online college search and admissions tool he launched in 1995. And, like Embark, Chen sees NewRetirement as a digital solution to the transition facing millions of Americans.

“120 million Americans over age 50 own 80% of this country's wealth,” Chen said, “but running out of money remains a top 10 fear, and nearly half of Americans say they are worried about it. “.

In fact, the majority of Americans (up to 65%, for example) Charles Schwab Modern Wealth Survey 2023 — not having a formal financial plan. And although 37% of respondents say they work with a financial advisor, two-thirds of Americans believe their financial planning needs improvement, according to Northwestern Mutual 2023 Planning and Progress Study.

NewRetirement, which started as a consumer offering and expanded into enterprise in 2021, charges $120 per year for access to a suite of tools, calculators, recommendations and scenario comparisons and ~$1,500 per year for consultations with a financial planner certificate. Additionally, NewRetirement sells a private label, subscription-based version of its tools aimed at financial advisors.

Now, you may be wondering, what differentiates NewRetirement from startups like Retirable, which similarly provide a variety of retirement planning tools and access to asset managers? Chen says NewRetirement is one of the few (and perhaps the only) financial planning platforms that serves consumers, advisors, and workplaces alike.

“Our core innovation is enabling anyone to create a plan with industrial-strength tools, allowing advisors to collaborate with the end user and make it available at scale through enterprise partners who bring it to their clients,” Chen said. “As more financial services companies see their offerings, such as investment management, become commoditized, there is great value in helping current and potential clients think about their money holistically. By offering self-directed digital planning to clients instead of starting with a human advisor, they can scale and serve any number of users, learn about them, help them make good decisions, and position their products and services more effectively.”

Chen says currently about 70% of NewRetirement's revenue is business, with the remaining 30% coming from consumer clients. The platform has 20,000 individual subscribers and “several” wealth management clients, as well as “multiple” enterprise clients, including Nationwide, which recently expanded an existing partnership with NewRetirement.

That momentum no doubt helped NewRetirement close its Series A funding round this month.

The company raised $20 million in a tranche that brings 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 injection will be used to expand NewRetirement's 50-employee business products, expand onboarding, accelerate R&D efforts and build capacity to meet future demand.

“With this new capital, we will have three or four years of runway,” Chen said. “That gives us time to continue expanding our business partnerships and improving our product. What's more, the current crisis is allowing us to attract incredible talent. “We have a solid team and we will expand the squad even further this year.”