When entrepreneur Stephen Chen’s mother started approaching retirement age, she was pressured to borrow cash from Chen — and Chen’s brother — to make ends meet. They needed to assist, however the siblings additionally needed to determine a extra sustainable, long-term answer that’d assist their mother retire with out having to fret about funds.
Chen tried to get steerage from a monetary adviser, however nobody would take his mom as a consumer as a result of her internet price wasn’t thought of excessive sufficient. So Chen began constructing spreadsheets and monetary fashions himself, doing his greatest to determine how his mother might dwell the retirement life-style that she needed.
“Folks like my mother lack the instruments to have a look at their cash holistically and strategically to allow them to make knowledgeable choices, monitor their monetary state of affairs, perceive which levers to drag and when and make the connection between the alternatives they make right this moment and the long-term ramifications to their plan,” Chen advised TechCrunch. “There’s a confluence of things that will alter the way forward for monetary planning and advising.”
It was after Chen helped his mother decrease her bills, work out when to say Social Safety, determine when to downsize and take different steps to grow to be financially impartial that Chen realized numerous different older People had been going through the identical challenges.
So Chen based NewRetirement, a Mill Valley-based firm constructing software program to assist individuals create monetary retirement plans. Right this moment, NewRetirement’s direct-to-consumer merchandise energy monetary planning for 70,000 customers managing near $100 billion in their very own monetary plans, in line with Chen.
“Our fashions transcend financial savings and investments, taking into consideration the entire different components in an individual’s life, from residence fairness, healthcare prices and taxes to Medicare and Social Safety,” Chen stated. “Each time a consumer makes a change, we run hundreds of simulations with a purpose to assist them optimize their plan … We account for hundreds of various situations, enabling customers to confidently map out accumulation and decumulation projections with digital steerage.”
NewRetirement is Chen’s second startup after Embark, an internet faculty search and admissions instrument he launched in 1995. And, like Embark, Chen sees NewRetirement as a digital answer to a transition confronted by tens of millions of People.
“120 million People over age 50 maintain 80% of the wealth on this nation,” Chen stated, “However working out of cash stays a prime 10 concern, with almost half of People saying they’re apprehensive about it.”
NewRetirement’s platform makes use of predictive modeling and knowledge analytics to assist customers suss out the best financial savings approaches. Picture Credit: NewRetirement
Certainly, nearly all of People — as many as 65%, per Charles Schwab’s Fashionable Wealth Survey 2023 — don’t have any formal monetary plan. And whereas 37% of respondents say that they work with a monetary adviser, two-thirds of People consider that their monetary planning wants enchancment, in line with Northwestern Mutual’s Planning and Progress Examine 2023.
NewRetirement, which started as a shopper providing and in 2021 expanded to the enterprise, costs $120 per 12 months for entry to a set of instruments, calculators, suggestions and situation comparisons and ~$1,500 per 12 months for check-ins with an authorized monetary planner. As well as, NewRetirement sells a subscription-based non-public label model of its instruments aimed toward monetary advisers.
Now, you would possibly marvel, what makes NewRetirement completely different from startups like Retirable, which equally offers an array of retirement planning instruments and entry to asset managers? Chen asserts that NewRetirement is among the few — and maybe solely — monetary planning platform that serves shoppers in addition to advisers and workplaces.
“Our core innovation is permitting anybody to create a plan with industrial-strength instruments, enabling advisers to collaborate with the tip consumer and making this accessible at scale via enterprise companions who deliver it to their clients,” Chen stated. “As extra monetary providers firms see their choices like funding administration grow to be commoditized, there’s enormous worth in serving to shoppers and prospects take into consideration their cash holistically. By providing self-directed digital planning to shoppers versus beginning with a human adviser, they’ll scale and serve any variety of customers, study them, assist them make good choices and place their services and products extra successfully.”
Chen says that about 70% of NewRetirement’s income is enterprise presently, with the remaining 30% coming from shopper clients. The platform has 20,000 particular person subscribers and “a number of” wealth administration shoppers in addition to “a number of” enterprise clients together with Nationwide, which just lately expanded an present partnership with NewRetirement.
That momentum little doubt helped NewRetirement to cinch its Sequence A funding spherical this month.
The corporate raised $20 million in a tranche that brings its whole raised to $20.8 million, led by Allegis Capital with participation from Nationwide Ventures, Northwestern Mutual Future Ventures, Plug and Play Ventures, Motley Idiot Ventures and others. Chen says that the money infusion can be used to develop 50-employee NewRetirement’s enterprise merchandise, scale up onboarding, speed up R&D efforts and construct capability to satisfy future demand.
“With this new capital, we may have three to 4 years of runway,” Chen stated. “That offers us time to proceed to scale our enterprise partnerships and improve our product. What’s extra, the present downturn is enabling us to herald unimaginable expertise. We’ve a powerful group in place and can develop headcount additional this 12 months.”