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NewRetirement wants to simplify retirement financial planning

When entrepreneur Stephen Chen’s mother was about to retire, she was forced to borrow money from Chen and Chen’s brothers to make ends meet. They wanted to help, but the siblings also wanted to find a more sustainable long-term solution to help their mom retire without having to worry about finances.

Chen tried to seek guidance from financial advisors, but no one was willing to accept his mother as a client because her net worth was not considered high enough. So Chen started building spreadsheets and financial models on his own, trying his best to figure out how his mom could live the retirement lifestyle she wanted.

“People like my mom lack the tools to look at their money holistically and strategically, so they can’t make informed decisions, monitor their finances, know which levers to use when, and put the decisions they make today into The choice is tied to long-term options. It has an impact on their plans,” Chen told TechCrunch. “There are multiple factors that may change the future of financial planning and advising.”

After Chen helped his mom lower her expenses, figure out when to file for Social Security, decide when to downsize and take other steps toward financial independence, Chen realized that many other older Americans were facing the same challenges.

So Chen founded NewRetirement, a Mill Valley-based company that develops software to help people plan for financial retirement. Today, NewRetirement’s direct-to-consumer products provide financial planning to 70,000 users, and they manage nearly $100 billion in their own financial plans, Chen said.

“Our model goes beyond savings and investments to consider all other factors in a person’s life, from home equity, health care costs and taxes to Medicare and Social Security,” Chen said. “Every time users make a change, we run thousands of simulations to help them optimize their plans…We consider thousands of different scenarios, allowing users to confidently develop accumulation and reduction forecasts with numerical guidance.”

NewRetirement is Chen’s second company, following Embark, an online college search and admissions tool he launched in 1995. Like Embark, Chen sees NewRetirement as a digital solution to the transformation facing millions of Americans.

“120 million Americans over the age of 50 control 80% of the country’s wealth,” Chen said. “But running out of money remains a top ten fear issue, with nearly half of Americans saying they are worried about it.”

newly retired

NewRetirement’s platform uses predictive modeling and data analytics to help users figure out the right way to save. Image Source: newly retired

In fact, according to Charles Schwab’s 2023 Modern Wealth Survey, the majority of Americans (a whopping 65%) do not have a formal financial plan. While 37% of respondents said 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.

Initially a product for consumers and expanding to businesses in 2021, NewRetirement charges $120 per year for access to a suite of tools, calculators, advice and scenario comparisons, and about $1,500 per year for certified financial planners cost. In addition, NewRetirement sells private-label, subscription-based versions of its tools aimed at financial advisors.

Now, you might be wondering, how does NewRetirement differ from startups like Retirable, which also offer a range of retirement planning tools and the services of an asset manager? Chen claims that NewRetirement is one of the few (perhaps the only) financial planning platforms that serves consumers, advisors and workplaces.

“Our core innovation is to allow anyone to develop plans using industrial-strength tools, enabling advisors to collaborate with end users and make them available to clients at scale through enterprise partners,” Chen said. “As more financial services firms see their products such as investment management become commoditized, there is huge value in helping customers and prospects think holistically about their money. By providing customers with autonomous digital planning rather than starting from manual Starting with consultants, they can scale and serve any number of users, understanding them, helping them make good decisions and position their products and services more effectively.”

Currently, about 70% of NewRetirement’s revenue comes from businesses, with the remaining 30% coming from consumer customers, Chen said. The platform has 20,000 individual subscribers and “multiple” wealth management clients as well as “multiple” corporate clients, including Nationwide, which recently expanded its existing partnership with NewRetirement.

That momentum certainly helped NewRetirement close its Series A round of funding this month.

The company raised $20 million at one time, bringing its total funding 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 said the cash infusion will be used to expand NewRetirement’s enterprise offerings, which has 50 employees, expand onboarding, accelerate research and development efforts and build capacity to meet future demand.

“With this new funding, we will have three to four years of runway,” Chen said. “This gives us time to continue to expand our corporate partnerships and enhance our offerings. More importantly, the current economic downturn allows us to bring on incredible talent. We have a strong team that will Further expand the staff size.”

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