NewRetirement wants to simplify financial planning for retirement

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 shopper 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 stay the retirement way of life that she needed.

“Folks like my mother lack the instruments to take a look at their cash holistically and strategically to allow them to make knowledgeable selections, monitor their monetary state of affairs, perceive which levers to tug and when and make the connection between the alternatives they make in the present day and the long-term ramifications to their plan,” Chen informed 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, determine when to assert Social Safety, resolve when to downsize and take different steps to change into financially impartial that Chen realized a lot of different older Individuals have been dealing with the identical challenges.

So Chen based NewRetirement, a Mill Valley-based firm constructing software program to assist individuals create monetary retirement plans. As we speak, NewRetirement’s direct-to-consumer merchandise energy monetary planning for 70,000 customers managing near $100 billion in their very own monetary plans, in response to Chen.

“Our fashions transcend financial savings and investments, making an allowance for the entire different elements in an individual’s life, from dwelling fairness, healthcare prices and taxes to Medicare and Social Safety,” Chen mentioned. “Each time a person makes a change, we run hundreds of simulations with a view to assist them optimize their plan … We account for hundreds of various eventualities, enabling customers to confidently map out accumulation and decumulation projections with digital steerage.”

NewRetirement is Chen’s second startup after Embark, a web-based school search and admissions software he launched in 1995. And, like Embark, Chen sees NewRetirement as a digital answer to a transition confronted by thousands and thousands of Individuals.

“120 million Individuals over age 50 maintain 80% of the wealth on this nation,” Chen mentioned, “However operating out of cash stays a prime 10 concern, with almost half of Individuals saying they’re frightened 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 Individuals — as many as 65%, per Charles Schwab’s Modern Wealth Survey 2023 — haven’t any formal monetary plan. And whereas 37% of respondents say that they work with a monetary adviser, two-thirds of Individuals imagine that their monetary planning wants enchancment, in response to Northwestern Mutual’s Planning and Progress Study 2023.

NewRetirement, which started as a client providing and in 2021 expanded to the enterprise, fees $120 per 12 months for entry to a set of instruments, calculators, suggestions and state of affairs comparisons and ~$1,500 per 12 months for check-ins with an authorized monetary planner. As well as, NewRetirement sells a subscription-based personal label model of its instruments aimed toward monetary advisers.

Now, you may surprise, what makes NewRetirement totally different from startups like Retirable, which equally supplies an array of retirement planning instruments and entry to asset managers? Chen asserts that NewRetirement is likely one of the few — and maybe solely — monetary planning platform that serves customers 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 person and making this accessible at scale by way of enterprise companions who carry it to their prospects,” Chen mentioned. “As extra monetary companies firms see their choices like funding administration change into commoditized, there’s large 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 selections 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 client prospects. The platform has 20,000 particular person subscribers and “a number of” wealth administration shoppers in addition to “a number of” enterprise prospects together with Nationwide, which not too long ago expanded an current partnership with NewRetirement.

That momentum little question helped NewRetirement to cinch its Collection 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 will likely be used to broaden 50-employee NewRetirement’s enterprise merchandise, scale up onboarding, speed up R&D efforts and construct capability to fulfill future demand.

“With this new capital, we can have three to 4 years of runway,” Chen mentioned. “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 usher in unbelievable expertise. We have now a powerful group in place and can broaden headcount additional this 12 months.”