When entrepreneur Stephen Chen’s mother started approaching retirement age, she was compelled 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 steering from a monetary adviser, however nobody would take his mom as a shopper as a result of her web price wasn’t thought-about excessive sufficient. So Chen began constructing spreadsheets and monetary fashions himself, doing his finest to determine how his mother might stay the retirement way of life 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 now and the long-term ramifications to their plan,” Chen instructed For Millionaires. “There’s a confluence of things which will alter the way forward for monetary planning and advising.”

It was after Chen helped his mother decrease her bills, work out when to assert Social Safety, resolve when to downsize and take different steps to develop into financially unbiased that Chen realized plenty of different older Individuals have been going through the identical challenges.

So Chen based NewRetirement, a Mill Valley-based firm constructing software program to assist folks 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 response to Chen.

“Our fashions transcend financial savings and investments, making an allowance for all the different elements in an individual’s life, from residence fairness, healthcare prices and taxes to Medicare and Social Safety,” Chen mentioned. “Each time a person makes a change, we run hundreds of simulations so as 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 steering.”

NewRetirement is Chen’s second startup after Embark, a web based faculty search and admissions instrument 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 high 10 concern, with almost half of Individuals saying they’re fearful about it.”

NewRetirement’s platform makes use of predictive modeling and information analytics to assist customers suss out the fitting financial savings approaches. Picture Credit: NewRetirement

Certainly, the vast majority 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 consider 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, costs $120 per yr for entry to a collection of instruments, calculators, suggestions and state of affairs comparisons and ~$1,500 per yr 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 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 person and making this obtainable at scale by means of enterprise companions who carry it to their clients,” Chen mentioned. “As extra monetary companies firms see their choices like funding administration develop into commoditized, there’s big worth in serving to purchasers and prospects take into consideration their cash holistically. By providing self-directed digital planning to purchasers versus beginning with a human adviser, they will scale and serve any variety of customers, find out about them, assist them make good choices and place their services extra successfully.”

Chen says that about 70% of NewRetirement’s income is enterprise presently, with the remaining 30% coming from client clients. The platform has 20,000 particular person subscribers and “a number of” wealth administration purchasers in addition to “a number of” enterprise clients together with Nationwide, which not too long ago expanded an present partnership with NewRetirement.

That momentum little question helped NewRetirement to cinch its Sequence A funding spherical this month.

The corporate raised $20 million in a tranche that brings its complete 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 increase 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 mentioned. “That provides 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 now have a powerful workforce in place and can increase headcount additional this yr.”