When Stephen Chen’s mom was approaching retirement age, she found herself struggling financially and turned to Chen and his brother for help. While they were happy to assist, they also wanted to find a long-term solution that would ease their mom’s worries about finances once and for all.
Chen sought the advice of financial planners, but they were not interested in taking on his mother as a client due to her low net worth. Faced with the challenge of helping his mother achieve the retirement lifestyle she desired, Chen took matters into his own hands and began creating spreadsheets and financial models to find a solution.
“People like my mom lack the tools to look at their money holistically 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 choices they make today and the long-term ramifications to their plan.” – Stephen Chen
As he helped his mother reduce her expenses, plan for Social Security, and make other financial decisions for a secure retirement, Chen realized that many older Americans were facing similar challenges.
This realization led Chen to launch NewRetirement, a company based in Mill Valley that provides software to help individuals create financial retirement plans. As of today, NewRetirement’s direct-to-consumer products have helped 70,000 users and $100 billion in financial planning.
“Our models go beyond savings and investments, taking into account all of the other factors in a person’s life, from home equity, healthcare costs and taxes to Medicare and Social Security,” Chen explains. “Every time a user makes a change, we run thousands of simulations in order to help them optimize their plan … We account for thousands of different scenarios, enabling users to confidently map out accumulation and decumulation projections with digital guidance.”
Chen’s experience with NewRetirement may have been a result of his entrepreneurial spirit, but it wasn’t his first venture. In 1995, he launched Embark, an online college search and admissions tool. Like Embark, Chen views NewRetirement as a digital solution for a challenge faced by millions of Americans. According to Chen, “120 million Americans over the age of 50 hold 80% of the wealth in this country, yet running out of money remains a top fear for many.”
According to Charles Schwab’s Modern Wealth Survey in 2023, a majority of Americans do not have a formal financial plan. And while many work with a financial advisor, two-thirds still believe their financial planning needs improvement, according to Northwestern Mutual’s Planning and Progress Study in 2023.
NewRetirement began as a consumer offering but expanded to the enterprise in 2021. Subscription prices for its suite of tools, calculators, recommendations, and scenario comparisons start at $120 per year, while more personalized check-ins with a certified financial planner cost $1,500 per year. Additionally, NewRetirement offers a subscription-based private label version of its tools for financial advisors and workplaces.
“Our core innovation is allowing anyone to create a plan with industrial-strength tools, enabling advisers to collaborate with the end user and making this available at scale through enterprise partners who bring it to their customers,” Chen says. “As more financial services companies see their offerings like investment management become commoditized, there’s huge value in helping clients and prospects think about their money holistically. By offering self-directed digital planning to clients versus starting with a human adviser, 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.”
Currently, 70% of NewRetirement’s revenue comes from enterprise partnerships, with the remaining 30% from consumer customers. The platform has 20,000 individual subscribers and partnerships with several wealth management clients and multiple enterprise customers, including Nationwide.
With its recent Series A funding of $20 million, led by Allegis Capital, and participation from Nationwide Ventures, Northwestern Mutual Future Ventures, Plug and Play Ventures, Motley Fool Ventures, and others, Chen plans to use the funds to expand the company’s enterprise products, improve onboarding, accelerate research and development, and increase capacity to meet future demands.
“With this new capital, we will have three to four years of runway,” Chen explains. “That gives us time to continue to scale our enterprise partnerships and enhance our product. What’s more, the current downturn is enabling us to bring in incredible talent. We have a strong team in place and will expand headcount further this year.”
