For most, the shortfall stems from too few years of credited service in the system. Replacing 70 to 85 percent of a working salary with SDRS and Primary Social Security benefits presumes a long-term career. If you don't have enough years, you won't be able to reach the 70 to 85 percent replacement target from SDRS and Social Security alone. Five Characteristics of the SRP Make It Especially Attractive to SDRS Members 1 . All contributions are made through automatic payroll deductions, resulting in consistent savings.
Contributions are exceptionally tax-efficient.
All federal income taxes are deferred on contributions and investment earnings until after you begin withdrawing benefits from the plan. Depending on your income tax bracket, you could save 15 to 30 cents on every dollar contributed and earned. Of course, these taxes are only deferred, not eliminated. All withdrawals from the SRP are subject to tax, but at retirement you are likely to be in a much lower tax bracket, and you will have had the advantage of using the tax dollars to compound your investment earnings. To meet varying levels of risk tolerance, the SRP offers a wide spectrum of investment alternatives, ranging from highly conservative to aggressive.