When entrepreneur Stephen Chen’s mom started approaching retirement age, she had 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 mom retire without having to worry about finances.
Chen tried to get guidance from a financial advisor, but no one would take his mother as a client because her net worth was not considered high enough. So Chen started making spreadsheets and financial models himself, doing what he could to figure out how his mom could live the lifestyle she wanted in retirement.
“People like my mom don’t have the tools to look at their money holistically and strategically so they can make informed decisions, monitor their finances, understand which levers to pull and when, and make the connection between choices they make today and the long-term consequences of their plan,” Chen told TechCrunch. “There are a number of factors that could change the future of financial planning and advice.”
It was after Chen helped his mom cut her expenses, figure out when to claim Social Security, decide when to downsize and take other steps to become financially independent that Chen realized that many other older Americans faced the same challenges.
Thus Chen was founded New Retirement, a Mill Valley-based company-building software to help people create financial retirement plans. Today, NewRetirement’s direct-to-consumer products power 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 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 design… We calculate thousands of different scenarios, allowing users to confidently map build-up and de-build views with digital guidance.”
NewRetirement is Chen’s second startup after Embark, an online college search and admissions tool launched in 1995. And, like Embark, Chen sees NewRetirement as a digital solution to a transition facing millions of Americans.
“120 million Americans over 50 own 80% of the wealth in this country,” Chen said, “But lack of money remains a top 10 fear, with nearly half of Americans saying they worry about it.”
NewRetirement’s platform uses predictive modeling and data analytics to help users find the right savings approaches. Image Credits: New Retirement
Indeed, the majority of Americans — as many as 65%, per Charles Schwab Modern Wealth Survey 2023 — 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 2023 Planning and Progress Study.
NewRetirement, which started as a consumer offering and expanded to business in 2021, charges $120 per year for access to a range of tools, calculators, recommendations and scenario comparisons, and ~$1,500 per year to check-in with a certified financial planner. In addition, NewRetirement sells a subscription private label version of its tools aimed at financial advisors.
Now, you might be wondering, what makes NewRetirement different from startups like Retirable, which similarly provides a range of retirement planning tools and access to asset managers? Chen claims that NewRetirement is one of the few — and perhaps only — financial planning platforms that serve consumers as well as advisors and workplaces.
“Our core innovation allows anyone to build a plan with industrial-strength tools, allowing consultants to work with the end user and make it available at scale through enterprise partners who offer it to their clients,” Chen said. “As more financial services firms see their offerings, such as investment management, become commoditized, there is tremendous value in helping clients and prospects think holistically about their money. By offering self-directed digital programming to clients versus 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 about 70% of NewRetirement’s revenue is currently 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” corporate 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 revenue 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, scale integration, accelerate R&D efforts and build capacity 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 to scale our corporate partnerships and improve our product. Plus, the current recession is giving us the ability to bring in incredible talent. We have a strong team and will further expand the number of employees this year.”
