One of the most common questions Southern California Edison employees ask as retirement approaches is, "How much income will I need in retirement?"

 

The answer is different for everyone. It depends on factors such as your desired lifestyle, retirement age, healthcare expenses, taxes, inflation, travel plans, and the income sources available to you.

 

Rather than focusing on replacing a specific percentage of your salary, many retirees find it more helpful to estimate their expected retirement expenses and determine how those expenses may be covered by pension income, Social Security, retirement savings, and other assets.

 

Understanding your expected income needs is an important step toward building a retirement strategy designed to support your long-term goals.

 

Retirement Changes How You Think About Income

 

During your working years, your paycheck likely covered most of your monthly expenses.

 

In retirement, that paycheck is often replaced by multiple income sources that may include:

 

• SCE pension benefits
• Social Security
• 401(k) withdrawals
• IRA distributions
• Personal savings
• Taxable investment accounts

 

The goal is not simply generating income—it's creating a sustainable retirement income strategy that aligns with your lifestyle and financial objectives.

 

Start With Your Spending

 

Many retirement income discussions begin with assets.

 

A better starting point is often your expected spending.

 

Consider expenses such as:

 

• Housing
• Utilities
• Healthcare
• Insurance
• Travel
• Taxes
• Entertainment
• Gifts and charitable giving
• Home maintenance

 

Some expenses may decrease during retirement, while others—particularly healthcare—may increase.

 

Understanding where your money is likely to go can provide a more realistic estimate of your retirement income needs.

 

Key Question

Have you estimated what your monthly spending may look like after you stop working?

 

Your Pension May Cover a Significant Portion of Your Income

 

For many Southern California Edison employees, the pension serves as a foundational source of retirement income.

 

Knowing how much of your monthly expenses may be covered by your pension can help identify whether additional income may be needed from other retirement resources.

 

Questions to consider include:

 

• How much guaranteed income will your pension provide?
• Will it cover your essential living expenses?
• How does your pension work alongside Social Security and retirement savings?

 

Looking at these income sources together often provides a clearer picture than evaluating them independently.

 

Key Question

How much of your retirement lifestyle will be supported by guaranteed income sources?

 

Don't Forget Healthcare Costs

 

Healthcare is often one of the largest expenses retirees face.

 

Depending on your retirement age, you may need to consider:

 

• Retiree healthcare coverage
• Medicare premiums
• Prescription medications
• Out-of-pocket medical expenses
• Long-term care planning

 

Planning for these costs can help reduce surprises later in retirement.

 

Key Question

Have you accounted for future healthcare expenses in your retirement income plan?

 

Inflation Matters

 

Retirement may last 20 to 30 years or longer.

 

During that time, inflation can reduce the purchasing power of your retirement income.

 

While certain income sources may increase over time, others may remain fixed. Understanding how inflation could affect your future spending is an important part of long-term retirement planning.

 

Key Question

Will your retirement income strategy help support your lifestyle if the cost of living continues to rise over time?

 

Taxes Still Matter in Retirement

 

Retirement does not eliminate taxes.

 

Depending on your situation, retirement income may come from several different sources, each with its own tax treatment.

 

These may include:

 

• Pension income
• Social Security benefits
• Traditional IRA withdrawals
• 401(k) distributions
• Taxable investment accounts

 

Understanding how these income sources work together may help support more informed retirement planning decisions.

 

Common Mistakes to Avoid

 

Using a One-Size-Fits-All Rule

Rules of thumb, such as replacing a certain percentage of your pre-retirement income, may not reflect your unique financial situation.

 

Underestimating Healthcare Expenses

Medical costs often become a larger part of retirement spending than many people anticipate.

 

Ignoring Inflation

A retirement that lasts decades may require income that can help support increasing living expenses over time.

 

Focusing Only on Investments

Retirement income planning involves much more than investment returns. Pensions, Social Security, taxes, healthcare, and spending all play important roles.

 

Forgetting to Revisit Your Plan

Retirement planning is an ongoing process. Your income needs and financial priorities may evolve over time.

 

Key Takeaways

 

• Retirement income needs are different for every individual and family.
• Estimating future spending is often the first step in determining retirement income needs.
• SCE pension benefits, Social Security, and retirement savings should be evaluated together.
• Healthcare expenses, inflation, and taxes can significantly influence retirement income needs.
• A retirement income strategy should reflect your personal goals, lifestyle, and financial circumstances.

 

Frequently Asked Questions

 

How much retirement income do SCE employees need?

The amount varies based on your lifestyle, expected expenses, retirement age, healthcare costs, and other personal financial considerations.

 

Is replacing 80% of my salary a good rule?

Rules of thumb may provide a starting point, but many retirees benefit from evaluating their own spending patterns and retirement goals rather than relying on a general guideline.

 

Will my SCE pension be enough?

For some retirees, the pension may cover a significant portion of retirement expenses. Others may supplement pension income with Social Security and retirement savings.

 

How should I account for inflation?

Inflation can reduce purchasing power over time. Evaluating how your retirement income sources may respond to inflation is an important planning consideration.

 

Should I include healthcare costs in my retirement budget?

Yes. Healthcare is often one of the largest expenses retirees face and should generally be incorporated into retirement planning.

 

How often should I review my retirement income plan?

Many individuals choose to review their retirement plan periodically, particularly before retirement and following significant life or financial changes.

 

Final Thoughts

 

Determining how much retirement income you'll need isn't about finding a magic number. It's about understanding your lifestyle, expected expenses, and the resources available to help support your retirement.

 

By evaluating your pension, Social Security, retirement savings, healthcare costs, taxes, and spending together, you can make more informed decisions about your financial future.

 

At Guardian Financial Partners, we believe retirement planning is most effective when every piece of your financial picture works together to help preserve your assets and protect your lifestyle.

 

 

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 a Registered Investment Adviser. Guardian Financial Partners is not affiliated with, endorsed by, or sponsored by Southern California Edison.