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Preparing for a Bright Future: Key Considerations for SCE Employees

Retirement Planning

Retirement is one of the biggest milestones in life, yet it’s not always easy to make the transition — whether it's something you’ve been preparing for or a decision that has crept up unexpectedly. Throughout our work with retirees, we’ve seen firsthand the emotional and financial complexities of stepping into retirement. Even if you’ve mentally prepared for this moment, the reality can still feel intimidating. However, taking proactive steps now can make your transition smoother, more comfortable, and ultimately more rewarding. After all, you’ve dedicated so much of your life and career to a company, and now it’s time to shift that focus to prioritizing your own dreams and goals. Achieving this transition requires the right tools, guidance, and motivation — along with a trusted partner to help you along the way.

As a Southern California Edison (SCE) employee approaching retirement, understanding your benefits is crucial to ensuring a secure and fulfilling future. Let’s explore the essential elements of your SCE retirement benefits and how to optimize them.

Understanding Your SCE Pension and 401(k) Benefits

At SCE, the pension plan is a cornerstone of your retirement strategy. Whether you're enrolled in the grandfathered pension plan or the cash balance plan, both options are designed to offer long-term financial security based on factors like your service duration, age, and salary.

  • Grandfathered Plan: If you’re part of the grandfathered pension plan, your benefit grows based on your service time, pay, and age. The lump sum value you receive is calculated using the present value of annuity payments. Simply put, your lump sum benefit tends to be lower when interest rates are higher.

  • Cash Balance Plan: If you’re under the cash balance plan, your benefits are based on your pay and interest rates, with your account balance determining your monthly annuity. Unlike the grandfathered plan, the cash balance plan often yields a higher lump sum if interest rates are favorable.

For those hired after January 1, 2017, the pension plan is not available. This means that these employees will need to rely more heavily on their savings, making it even more important to plan for retirement early on.

Maximizing Your 401(k) Savings

In addition to your pension plan, the SCE 401(k) Savings Plan provides a valuable opportunity to enhance your retirement savings. SCE offers a competitive match: they match the first 6% of your contributions, which are placed into a traditional 401(k). For employees hired after January 1, 2017, the company matches up to 10%. This match is a critical component of your retirement strategy and should be fully utilized to maximize your savings.

You can choose between a Traditional (pre-tax) 401(k) or a Roth (after-tax) 401(k) based on your current and future tax strategy. Consider how each option aligns with your financial goals when making contributions.

Planning Your Retirement Timeline

The decision of when to retire is monumental, and timing plays a key role in how well the transition will go. Be sure to familiarize yourself with SCE's retirement procedures, such as the advance notice required before your retirement date and how benefits like vacation and sick time will be processed. Knowing these details will help you avoid surprises and prepare financially for your next chapter.

For instance, if you’re planning to retire on April 1, 2025, here are some key dates to keep in mind:

  • Last day to notify SCE: February 28, 2025 (one month before your last day worked)
  • Last day worked: March 31, 2025
  • Benefit commencement date: April 1, 2025 (important for Grandfathered employees retiring at year-end)
  • Vacation pay: Issued separately with your final paycheck and is taxed as ordinary income.
  • Sick time: Payout depends on your employee status:
  • Non-Union Cash Balance: No sick pay.
  • Union Cash Balance: 20% sick time payout as a lump sum.
  • Grandfathered employees: 20% sick time payout, usually paid out monthly after retirement.

Financial Planning for a Secure Retirement

Determining how much money you need for retirement is a lot like creating a long-term budget. A good rule of thumb is to aim for about 75% of your pre-retirement income to maintain your lifestyle, as many expenses like mortgages or child-related costs tend to decrease. However, you should also consider additional income sources such as Social Security, part-time work, or investment income.

Once you’ve decided to retire, you’ll need to think carefully about what to do with your 401(k) and pension funds. Every retirement plan is unique, and there’s no one-size-fits-all approach. Your strategy will depend on your lifestyle goals and financial needs.

Steps to Take for a Smooth Retirement Transition

  1. Increase Your Savings: Fully contribute to your 401(k) to take advantage of SCE’s matching contributions. Carefully consider whether a Traditional or Roth 401(k) is right for you based on your current tax situation.
  2. Set Your Retirement Date Early: Choose your retirement date well in advance, and mark important milestones like the notification deadline to ensure a seamless transition.
  3. Meet with a Financial Advisor: A financial advisor can help you answer key retirement questions, such as:
  • Do I have enough saved for retirement?
  • How will my investments generate income in retirement?
  • When should I start Social Security benefits?
  • How will I handle healthcare and medical expenses?
  • What steps can I take to protect my savings from market volatility?

By taking these actions, you’ll lay the foundation for a comfortable, fulfilling retirement. It’s never too early to start planning — the sooner you begin, the smoother and more secure your retirement will be.

At KWB Wealth, we’re here to help guide you through the complexities of retirement planning. Let’s work together to make sure your golden years are truly golden

Click HERE to schedule a complimentary consultation with one of our advisors today.

 ~ Diana Sailler

The retirement benefits and strategies discussed are based on our understanding of Southern California Edison (SCE) plans and general retirement planning concepts. Always verify specific benefit details with SCE and consult with a financial advisor for personalized guidance tailored to your unique financial situation.