By Nino Pavan, J.D., CFP®
Life insurance is one of those financial decisions that’s easy to put off, especially when you’re not sure how much coveHave you spent a good part of your career at Southern California Edison? You may have noticed that the closer retirement gets, the more questions seem to pile up.
- Should you take your pension as a lump sum or as monthly checks?
- How can you pay for health coverage if you stop working before Medicare begins?
At Financial Designs, we’ve worked with SCE employees and retirees since 1986, and our retirement planning services are built around the decisions Edison employees face as their last day on the job comes into view.
Feeling uncertain at this stage is normal, and it usually comes from not knowing how the pieces fit together. In this article, I walk through the SCE-specific choices that shape your retirement income and the steps you can take now.
Start With What Edison Provides
If you were hired before December 31, 2017, you most likely earn a pension through the Southern California Edison Company Retirement Plan. Its cash balance account grows much like a savings account, with SCE crediting 3% to 9% of your base pay plus interest each month.
SCE also adds $150 a month to the account to help with healthcare costs after you retire. Some employees who were with Edison before 1999 are also “grandfathered” under an older formula, and the plan pays whichever benefit is larger. If you joined SCE after that date, you aren’t eligible for the pension, so your 401(k) carries more weight.
Our guide to Southern California Edison employee benefits covers the other benefits that may be available to you.
Your Pension Choice Is Permanent
When you retire, you’ll choose between taking your pension as a single lump sum or as monthly payments for life.
If you’re married, the automatic option is the 50% Spouse’s Pension, which continues half of your monthly benefit to your spouse after you pass away, and SCE pays the full cost of that feature. Choosing a lump sum or a different payment option requires your spouse’s notarized consent, and once your benefit start date arrives, your election can’t be changed.
If you’re grandfathered, interest rates also play a role. The lump-sum value of the older formula is calculated using rates from August of the prior year, so rising rates can shrink that lump sum.
For that reason, we encourage SCE clients to request benefit estimates for more than one
retirement date before they commit. We cover more of these considerations in Maximizing Your SCE Retirement Plan.
Bridge the Years Before Medicare
Edison lets eligible employees retire as early as 55 with at least five years of service, which can leave a gap of several years before Medicare begins at 65. The retiree healthcare credits in your cash balance account were designed to help with these costs.
SCE has also offered retiree medical coverage to eligible retirees, although your eligibility and share of the premium depend on factors like your age and years of service, so confirm those details before you set a retirement date.
Healthcare costs continue after 65 as well. Fidelity’s 2026 Retiree Health Care Cost Estimate projects that a 65-year-old retiring this year may spend an average of $185,500 on health care throughout retirement, and that figure doesn’t include long-term care. The standard Medicare Part B premium alone is $202.90 per month in 2026, and higher earners pay more.
Our article on common Medicare questions walks through the enrollment decisions many retirees find confusing.
Time Social Security Around Your Other Income
You can claim Social Security as early as 62, but your monthly benefit is permanently reduced if you start before your full retirement age, which is 67 for anyone born in 1960 or later.
For each year you wait past full retirement age, up to age 70, your benefit grows by 8%. The Social Security Administration’s early retirement reduction chart shows how much claiming early can cost based on your birth year.
For Edison retirees, the ideal claiming age often depends on how you take your pension. Monthly pension checks may give you room to delay Social Security, while a lump sum rolled into an IRA can cover your expenses as your future benefit continues to grow.
Make the Most of Your Final Working Years
Once you turn 50, the IRS lets you put more into your 401(k).
For 2026, the standard employee limit is $24,500, and employees 50 and older can add up to $8,000 more. If you’re 60, 61, 62, or 63 by the end of this year, your plan may allow a larger catch-up contribution of up to $11,250.
Starting in 2026, if your 2025 wages from SCE were above $150,000, those catch-up dollars must go into the Roth side of your 401(k), where you pay tax now so that qualified withdrawals later can be tax-free.
Put Your Financial Pieces Into One Written Plan
Each of these decisions affects the others, since your pension election changes how much you’ll need to draw from savings, and the way you draw from savings can raise both your tax bill and your Medicare premiums.
Our Financial Designs Retirement Blueprint looks at your SCE pension, 401(k), Social Security, and health coverage together, so you can see how your choices work before you make them. SoCal Gas employees face many of the same decisions, and we help them through the same process.
Planning with confidence starts with knowing your options.
To schedule a no-obligation consultation, call (909) 626-1642 or email fdc@fdcadvisors.com today!
Frequently Asked Questions
Should I take my SCE pension as a lump sum or monthly payments?
Neither option is right for everyone, and the better choice depends on your income needs and your spouse’s situation. Monthly payments last for life and can continue to a surviving spouse, while a lump sum rolled into an IRA gives you more control. The decision is permanent, so compare both alongside your Social Security claiming strategy.
How much can I contribute to my 401(k) at age 60 in 2026?
You can contribute up to $35,750 in 2026 if your plan allows the higher catch-up:
- $24,500 standard employee limit
- $11,250 catch-up for ages 60 through 63
Savers aged 50 to 59, or 64 and older, can add $8,000 instead. High earners’ catch-up dollars should go in as Roth contributions, which can affect your Roth conversion planning.
How much should I budget for healthcare in retirement?
Fidelity estimates that a 65-year-old retiring in 2026 may spend an average of $185,500 on healthcare throughout retirement, not counting long-term care. Your actual cost depends on your health and on whether you qualify for employer retiree coverage. Because higher income can raise Medicare premiums, timing your required withdrawals is part of healthcare planning too.
Do I need a financial advisor to retire from Southern California Edison?
Not always, but an advisor can help most when your decisions are permanent. The team at Financial Designs has worked with Southern California Edison employees and retirees since 1986, helping them compare pension options and plan their income around Social Security and Medicare.
About Nino
Nino Pavan is the President and a CERTIFIED FINANCIAL PLANNER® at Financial Designs in Claremont, CA, specializing in goal-centered retirement planning. With over 30 years of experience, Nino helps individuals and families navigate the retirement process with confidence, making it stress-free. He holds a law degree, a BS in Telecommunications Management, and is a contributing advisor to Kiplinger.
