Knowing when you can retire is about more than reaching a certain age or accumulating a certain amount of money. The more meaningful question is whether your financial resources can reasonably support the life you want to live, while also giving you enough flexibility to manage the uncertainties that come with retirement.

 

For Southern California Edison employees, that analysis may include an SCE pension for eligible employees, a 401(k), Social Security, personal investments, healthcare costs, taxes, housing expenses, and other sources of income or savings. But retirement readiness is not purely a financial calculation.

 

After decades of working, retirement also represents a significant life transition. Your schedule changes. Your relationships may change. Your sense of purpose may change. Even retirees who are financially well prepared can underestimate how different life feels once work is no longer the organizing force behind each week.

 

That is why the years leading into retirement and the first year or two afterward deserve thoughtful planning. The goal is not necessarily to find a single perfect retirement date. It is to build enough financial and personal clarity that when you decide to retire, you can approach the decision with confidence.

 

Start With the Life You Want to Live

 

A retirement plan should begin with something more personal than an investment account balance.

 

What do you actually want retirement to look like?

 

Some people imagine traveling extensively during the first several years. Others want to move closer to family, spend more time with grandchildren, purchase a second home, volunteer, work part time, or simply have more control over their time.

 

Those decisions have financial consequences, but they also give the financial plan something meaningful to measure.

 

Instead of beginning with, “Do I have enough money?” it can be more useful to begin with questions such as:

 

• Where do we want to live?
• What will a normal week look like?
• How much do we expect to travel?
• Will we financially support children or grandchildren?
• Do we want to work part time or consult?
• Are there major purchases we expect during the first several years?
• What expenses are essential to our lifestyle, and which are discretionary?

 

The clearer you become about the retirement you want, the more accurately you can determine what it may cost.

 

Key Question

If you retired tomorrow, do you have a reasonably clear picture of what you would want your life to look like?

 

Determine What Retirement Will Actually Cost

 

Many people approach retirement by looking at their current salary and assuming they need to replace a certain percentage of it.

 

That can be a useful starting point, but it is not necessarily the best way to determine retirement readiness.

 

Your salary and your retirement spending are two different things.

 

Once you retire, certain expenses may decline. You may no longer contribute to your 401(k), commute to work, or incur other employment-related expenses. Other costs may increase, particularly during the early years when retirees often have more time for travel, recreation, and other activities.

 

Healthcare may also become a larger expense, particularly if you retire before becoming eligible for Medicare.

 

A retirement spending analysis should therefore consider both your current lifestyle and how that lifestyle is likely to change.

 

It can be helpful to separate spending into two broad categories:

 

Essential expenses may include housing, food, utilities, insurance, healthcare, transportation, and taxes.

Discretionary expenses may include travel, entertainment, gifts, hobbies, dining, and other lifestyle choices.

 

Understanding the difference can become especially valuable during periods of market volatility because discretionary expenses may offer greater flexibility.

 

Key Question

Do you know approximately how much after-tax income you will need each year to support the retirement lifestyle you want?

 

Identify Where Your Retirement Income Will Come From

 

Once you have an estimate of your retirement spending, the next step is determining how those expenses may be funded.

 

For SCE employees, retirement resources may include:

 

• SCE pension benefits for eligible employees
• Social Security
• Edison 401(k) savings
• Traditional or Roth IRAs
• Taxable investment accounts
• Cash reserves
• Real estate or other income
• A spouse's retirement benefits or income

 

These resources do not all function the same way.

 

A pension and Social Security may provide relatively predictable monthly income. Investment accounts may provide greater flexibility but are also exposed to market fluctuations. Traditional retirement accounts generally create taxable income when distributions are taken, while qualified Roth distributions may receive different tax treatment.

 

The objective is to understand how these resources might work together.

 

For example, if pension and Social Security benefits cover most essential expenses, investment assets may have more flexibility to support discretionary spending and future needs. If the household depends heavily on portfolio withdrawals from the first day of retirement, investment risk and withdrawal strategy may require greater attention.

 

Retirement readiness is therefore less about arriving at one magic account balance and more about understanding whether your available resources can reasonably support your projected spending over time.

 

Test the Plan Before You Retire

 

A retirement projection should not assume that everything will go according to plan.

 

Markets will fluctuate. Inflation will change. Healthcare expenses may rise. Tax laws can change. One spouse may live considerably longer than expected.

 

A useful retirement analysis considers what could happen if conditions are less favorable than expected.

 

Some scenarios worth evaluating include:

 

• What if markets decline shortly after retirement?
• What if inflation remains elevated?
• What if you live into your 90s?
• What if you need significantly more healthcare?
• What if one spouse dies much earlier than the other?
• What if you decide to spend more during your first decade of retirement?
• What if long-term care is needed?
• What if taxes are higher in the future?

 

The purpose of this exercise is not to create fear or predict the future. It is to understand how much flexibility exists within the plan.

 

A retirement strategy that only works when every assumption is favorable may deserve additional consideration.

 

Key Question

What would happen to your retirement plan if the first five years were financially more difficult than expected?

 

Pay Particular Attention to the Years Around Retirement

 

The several years immediately before and after retirement can be especially important.

 

During your working years, you are generally adding money to retirement accounts. Once you retire, that relationship reverses and your portfolio may begin providing income.

 

This transition can make poor investment returns early in retirement particularly challenging. If markets decline while you are simultaneously withdrawing money for living expenses, the portfolio may have fewer assets available to participate in a future recovery. This is commonly called sequence of returns risk.

 

That does not mean retirees should abandon long-term investing. A retirement that lasts several decades may still require growth to help offset inflation.

 

Instead, employees approaching retirement may want to evaluate how much short-term liquidity they have, how much of their spending is covered by predictable income, and whether their investment allocation still aligns with their changing needs.

 

The objective is to avoid reaching retirement and discovering that the investment strategy was designed entirely for accumulation rather than for generating retirement income.

 

Understand Your SCE Retirement Benefits Before Making the Decision

 

For eligible SCE employees, the pension can represent an important part of retirement planning.

 

Depending on the provisions applicable to the individual, employees may need to evaluate pension commencement dates and available payment options. Pension decisions can affect retirement income for many years and should generally be considered alongside the rest of the household's financial resources.

 

Employees who do not participate in the pension may rely more heavily on their 401(k), Social Security, and other accumulated assets to create retirement income.

 

Regardless of which SCE benefit structure applies, employees approaching retirement should understand what their benefits are expected to provide before selecting a retirement date.

 

Knowing the value of your benefits is one thing. Understanding how those benefits fit into your retirement income strategy is another.

 

Decide When Social Security Fits Into the Plan

 

Retiring and claiming Social Security do not have to happen at the same time.

 

Some retirees begin Social Security shortly after leaving work. Others may choose to use pension income, investment assets, or other resources for a period while delaying Social Security.

 

The appropriate claiming strategy depends on individual circumstances, including income needs, health, longevity expectations, marital status, survivor considerations, and taxes.

 

Rather than viewing Social Security as an isolated election, it may be more useful to evaluate how it coordinates with the rest of your retirement income.

 

For married couples, this analysis can be especially important because Social Security decisions may affect survivor income later.

 

Plan for Healthcare Before You Leave Work

 

Healthcare can be one of the most important considerations when determining whether retirement is financially attainable.

 

Someone retiring before Medicare eligibility needs to understand how medical insurance will be obtained and what it may cost during the transition.

 

Even after Medicare begins, healthcare expenses do not disappear. Retirees may still face premiums, supplemental coverage, prescription costs, dental and vision expenses, and other out-of-pocket costs.

 

Long-term care should also be considered separately from routine healthcare.

 

Before leaving SCE, employees should have a reasonable understanding of what healthcare coverage will look like and how those costs fit into the household budget.

 

A retirement plan can look strong until an underestimated healthcare expense is added to the analysis.

 

Consider Taxes Before Retirement, Not Just After

 

Retirement can create new tax-planning opportunities as the sources of household income change.

 

During working years, salary may represent the largest source of taxable income. After retirement, income may come from a pension, traditional retirement accounts, Social Security, taxable investments, and eventually Required Minimum Distributions.

 

The years immediately following retirement may sometimes create opportunities to evaluate withdrawal strategies, Roth conversions, charitable planning, or other tax considerations depending on individual circumstances.

 

The objective should not necessarily be to pay the least possible tax in any single year. Instead, it may be useful to consider taxes over the entire retirement horizon.

 

Taxes represent another reason why the retirement date itself should be coordinated with the broader financial plan rather than chosen independently.

 

Give Yourself a Retirement Runway

 

One of the most useful things someone can do during the final two or three years before retirement is begin living more intentionally as though retirement were approaching.

 

That may mean tracking spending more closely and determining whether your projected retirement budget is realistic.

 

It may also mean reducing debt, building an appropriate cash reserve, completing major home improvements while still working, reviewing estate planning documents, or determining whether a relocation is part of the plan.

 

This period can also be used to gradually shift attention toward what comes next personally.

 

Consider developing interests, routines, friendships, volunteer activities, travel plans, or part-time work that will continue after retirement.

 

Instead of viewing retirement as a cliff that you suddenly step off, think of it as a transition you begin preparing for several years in advance.

 

Retirement Readiness Is Also Emotional

 

Financial planning can tell you whether retirement appears financially attainable. It cannot entirely answer whether you are personally ready to retire.

 

For someone who has worked at SCE for 25, 30, or 40 years, work may represent much more than a paycheck. It can provide identity, friendships, structure, accomplishment, and a sense of purpose.

 

Those things do not automatically replace themselves when you retire.

 

The first several months can feel like an extended vacation. Eventually, however, retirement becomes everyday life.

 

Couples may also discover that retirement changes their relationship. Suddenly, two people who previously spent much of the day apart may be together significantly more often. Expectations around travel, household responsibilities, spending, family, and personal time may need to be discussed.

 

These are not strictly financial issues, but they can influence the success of retirement just as much as an investment portfolio.

 

Key Question

What are you retiring to, not simply what are you retiring from?

 

Your First Year of Retirement Is Part of the Plan

 

Retirement planning should not end on your last day of work.

 

The first year can be an important transition period during which many assumptions become reality.

 

You begin to see what you actually spend rather than what a spreadsheet projected. You learn whether you enjoy the amount of travel you anticipated. You experience withdrawing money from investments rather than contributing to them.

 

This may also be the first time you experience a significant market decline without a paycheck coming in.

 

For that reason, the retirement plan should be reviewed after retirement begins.

 

Questions to revisit may include:

 

• Is our spending consistent with what we expected?
• Do we have enough cash and liquidity?
• Are our investment withdrawals occurring as planned?
• Have our healthcare costs changed?
• Does our investment allocation still feel appropriate?
• Are there tax-planning opportunities?
• Are we enjoying the lifestyle we planned for?
• Is there anything we would like to change?

 

Retirement planning should be an ongoing process rather than a one-time calculation.

 

Common Mistakes to Avoid

 

Waiting for a Magic Number

There is no universal amount of money that determines retirement readiness. Spending, income sources, taxes, longevity, and lifestyle all influence how much someone may need.

 

Choosing a Retirement Date Based on One Benefit

A pension rate, Social Security milestone, bonus, or other benefit may influence timing, but retirement should generally be evaluated using the entire financial picture.

 

Underestimating the First Years of Retirement

Many retirees are most active during the early years, which may result in more travel and discretionary spending than expected.

 

Ignoring Market Risk

A significant market decline shortly after retirement can affect a portfolio differently than a decline during the accumulation years.

 

Underestimating Healthcare

Healthcare costs can materially affect a retirement budget, particularly for individuals retiring before Medicare eligibility.

 

Planning Financially but Not Personally

Having enough money does not automatically create a fulfilling retirement. Purpose, relationships, routine, and lifestyle deserve planning as well.

 

Treating Retirement as a One-Time Decision

Financial circumstances, markets, taxes, health, and personal priorities change. Retirement strategies should be reviewed periodically.

 

A Retirement Readiness Checklist

 

As you approach retirement, consider whether you can answer these questions with reasonable confidence:

 

• Do I know what I expect retirement to cost?
• Do I understand my SCE retirement benefits?
• Do I know when and how Social Security may fit into my strategy?
• Do I understand how healthcare will be covered?
• Do I know where my monthly retirement income will come from?
• Have I considered taxes in retirement?
• Have I tested the plan against market declines and inflation?
• Do I have sufficient liquidity for near-term needs?
• Have my spouse and I discussed what we want retirement to look like?
• Have I reviewed my estate plan and beneficiary designations?
• Do I know what I want to do with my time once I stop working?
• Do I have a process for reviewing the plan after retirement begins?

 

You do not need perfect certainty before retiring. Retirement contains too many unknowns for that.

 

What you want is enough preparation, flexibility, and understanding to make the decision from a position of confidence rather than hope.

 

Key Takeaways

 

Knowing when you can retire involves much more than reaching a particular age or savings balance.

 

For Southern California Edison employees, the process may include understanding SCE retirement benefits, estimating future spending, coordinating Social Security, preparing for healthcare expenses, considering taxes, reviewing investments, and determining how retirement income will be generated.

 

The final years before retirement can be particularly valuable for testing assumptions and preparing both financially and personally for the transition.

 

Just as importantly, retirement readiness should include a vision for life after work. Having financial independence is valuable, but knowing how you want to use that independence can make the transition more meaningful.

 

Frequently Asked Questions

 

How much money do I need to retire?

There is no single amount that applies to everyone. The amount needed depends on expected spending, available pension or Social Security income, investments, taxes, healthcare costs, longevity, and other individual circumstances.

 

How do I know if I can afford to retire?

A retirement analysis can compare expected spending with pension benefits, Social Security, retirement savings, and other resources while considering factors such as inflation, taxes, market volatility, and longevity.

 

When should I start planning for retirement?

Retirement planning can begin many years in advance, but the final two to five years before an anticipated retirement date can be especially important for refining spending assumptions, evaluating benefits, and coordinating retirement income.

 

Should I retire as soon as I am financially able?

Not necessarily. Financial readiness is only one consideration. Health, family, career satisfaction, personal goals, and how you want to spend your time may all influence the decision.

 

What should I do during my first year of retirement?

The first year can be a useful time to compare actual spending with projections, review investment withdrawals, evaluate healthcare and taxes, and determine whether your new lifestyle aligns with what you envisioned.

 

Final Thoughts

 

Perhaps the most important retirement question is not, “When am I allowed to retire?”

 

It is, “When have I done enough planning to feel confident that I am ready?”

 

For Southern California Edison employees, answering that question means bringing together retirement benefits, Social Security, investments, healthcare, taxes, spending, and risk into one coordinated plan. It also means thinking seriously about the personal transition from a career that may have shaped decades of your life into a new chapter with greater control over your time.

 

At Guardian Financial Partners, we believe retirement planning should help people understand what is possible before they make the decision. The objective is not to predict every detail of the next 30 years. It is to develop a strategy with enough clarity and flexibility to help you make informed decisions, adapt when circumstances change, and enter retirement with greater confidence.

 

Ultimately, retirement should be about more than having enough money to stop working. It should be about creating a financial foundation that allows you to preserve your assets and protect your lifestyle while making the most of the years ahead.

 

 

About the Author

 

Casey S. Bartels, CFP® is a Founding Partner of Guardian Financial Partners. Since 2007, Casey and his partners have worked with Southern California Edison employees and executives, helping them navigate retirement planning, pension decisions, and other important financial considerations.

 

Educating Edison is our educational series designed to help Southern California Edison employees better navigate their financial lives.

 

Guardian Financial Partners is not affiliated with, endorsed by, or sponsored by Southern California Edison. The content presented in the Educating Edison series is for educational purposes only and is not intended as individualized investment, tax, or legal advice.