SCE Retirement Planning Guide 2026: 401(k), Pension Options, and What to Do Now

Retirement is one of the most significant milestones you'll ever reach — and if you're an SCE employee starting to think about your next chapter, there's no better time than right now to get serious about your plan. Whether your retirement date is just around the corner or still a few years away, 2026 is shaping up to be a pivotal year to reassess, recalibrate, and take action.

Throughout our work with retirees, we've seen firsthand how the emotional and financial complexities of this transition can catch even the most prepared employees off guard. The good news? With the right guidance and a clear roadmap, stepping into retirement can be one of the most exciting and empowering decisions of your life. You've given so much to your career — now it's time to invest that same energy into yourself and your next chapter.

Here's what SCE employees nearing retirement should focus on today.

Understanding Your SCE Pension Benefits

Your pension remains one of the most valuable components of your retirement package, and understanding how it works is essential to making smart decisions.

Grandfathered Plan: If you are under the grandfather plan, hats off to you! That means you’ve been with SCE for over 45 years; now is a great time to consider retirement. Your benefit is calculated based on your years of service, pay, and age. The lump sum value reflects the present value of your future annuity payments — and with interest rates remaining elevated compared to recent historical norms, it's especially important to model out your lump sum vs. annuity options carefully before making a decision.

Cash Balance Plan: Your benefit is tied to your account balance, which grows based on pay credits and interest credits. In a higher-interest-rate environment, the cash balance plan can offer competitive lump-sum values. This is another reason to run the numbers now rather than later.

Hired after January 1, 2017? The pension plan is not available to you, which means your retirement security rests even more heavily on your 401(k) savings and other assets. Starting or accelerating your savings strategy now is critical.

Maximizing Your SCE 401(k) in 2026

The SCE 401(k) Savings Plan continues to be one of the most powerful tools available to you, especially given SCE's generous matching contribution.

• Pre-2017 employees: SCE matches the first 6% of your contributions into a traditional 401(k).
• Post-2017 employees: SCE matches up to 10% — one of the more competitive matches in the industry.

The IRS has increased contribution limits for 2026, giving you more room to save. Here's what you need to know:

• Standard limit: You can contribute up to $24,500 to your 401(k) in 2026.
• Catch-up contribution (age 50+): If you're 50 or older, you can contribute an additional $8,000 beyond the standard limit, for a total of $32,500.
• "Super" catch-up contribution (ages 60–63): Thanks to the SECURE 2.0 Act, employees aged 60, 61, 62, or 63 can contribute an even higher catch-up of $11,250 instead of the standard $8,000, bringing their total potential contribution to $35,750.

A new Roth catch-up rule takes effect in 2026: If you earned $150,000 or more in FICA wages in 2025 and are age 50 or older, your catch-up contributions must now be made as Roth (after-tax) contributions — this is a change mandated by SECURE 2.0. Your regular contributions (up to the $24,500 limit) can still be made as pre-tax or Roth, but the catch-up portion must go into a Roth account. 

This rule change may actually work in your favor in the long run — Roth contributions grow tax-free and qualified withdrawals in retirement are tax-free — but it's worth reviewing how it fits into your broader tax strategy. Our financial planning team can help you evaluate the impact.

You'll also want to think intentionally about your overall Traditional (pre-tax) vs. Roth (after-tax) contribution strategy. With tax policy remaining a topic of active debate, diversifying your tax exposure now could offer meaningful flexibility in retirement.

Planning Your Retirement Timeline

Timing your retirement isn't just a personal decision; it has real financial implications. SCE requires advance notice before your retirement date, and understanding the key deadlines will help you avoid costly missteps.

For example, if you're targeting a mid-2026 retirement date, here are the types of milestones to plan around:

• Notification deadline: Typically, one month before your last day worked
• Vacation pay: Issued separately with your final paycheck and taxed as ordinary income
• Sick time payout:
  • Non-Union Cash Balance: No sick pay
  • Union Cash Balance: 20% payout as a lump sum
  • Grandfathered employees: 20% payout, generally distributed monthly after retirement

Getting these details right and mapping them to your personal cash flow needs is something our team can help you do with confidence.

How Much Is Enough? Building Your Retirement Income Plan

One of the most common questions we hear is simply: "Do I have enough?" A widely used guideline is to target roughly 75% of your pre-retirement income to maintain your lifestyle, as certain expenses (mortgages, commuting costs, etc.) tend to decline. But your number is your number, and it depends on your goals, health, family situation, and retirement vision.

Beyond your pension and 401(k), your retirement income picture includes:

• Social Security — When to claim is not a black-and-white answer. For some, delaying benefits can significantly increase their lifetime payout; for others, it doesn’t. 
• Investment portfolio income — How your assets are positioned for income and growth in retirement matters.
• Part-time work or consulting — Many retirees find purpose and supplemental income through part-time or passion-driven work in their early retirement years.

Steps to Take Right Now

1. Max out your 401(k) contributions — especially if you're within five years of retirement. Take full advantage of SCE's match and 2026 catch-up limits.
2. Set your retirement date — Having a target date creates urgency and helps you sequence all the moving pieces properly.
3. Think through healthcare — Bridging to Medicare (if you're not yet 65) is one of the most overlooked and potentially costly gaps in retirement planning.
4. Have a personalized investment conversation — How your portfolio is structured in retirement is not a one-size-fits-all decision. The right approach depends entirely on your individual goals, your vision for retirement, and your personal comfort with risk. There's no universal answer — and anyone who tells you otherwise isn't giving you the full picture. This is exactly where working with a team of experienced financial planners like us makes all the difference.
5. Meet with a financial advisor — A personalized retirement income plan can help you answer the questions that matter most:
   • When should I retire?
   • How do I generate a reliable income from my savings?
   • When is the best time to claim Social Security?
   • How should my portfolio be structured given my goals and risk tolerance?
   • What's the most tax-efficient way to draw down my assets?

Let's Make Your Retirement Plan a Reality

At KWB Wealth, we have helped hundreds of SCE employees navigate the transition from career to retirement with clarity and confidence. We understand the unique benefits, timelines, and decisions that come with retiring from SCE, and we're here to help you make the most of everything you've worked so hard to build.

Whether retirement is six months away or six years away, the best time to start planning is today.

Your brighter future starts with a complimentary consultation. Let's schedule →