- Foundation members get an unreduced benefit at 65 or under the Rule of 85 (age plus service of 85, not before 55). Generational members get an unreduced benefit at 67; there is no Rule of 85.Foundation Handbook (July 2024), pp. 10, 12; Generational Handbook (July 2024), p. 10
- For SDRS, the first day of your birth month counts as your birthday. Someone born May 20 is treated as turning 65 on May 1.SDCL 3-12C-702
Not sure which you are? See Foundation or Generational.
Foundation members: the Rule of 85
Your age plus your credited service must reach 85, and you must be at least 55. Service stops growing once you leave, so the date you'd meet the rule is set by your service when you stop. Foundation Handbook (July 2024), p. 12, Special Early Retirement Benefits (Rule of 85), Requirements to Meet the Rule of 85; SDCL 3-12C-1110(1)
| Age | 55 | 56 | 57 | 58 | 59 | 60 | 61 | 62 | 63 | 64 |
|---|---|---|---|---|---|---|---|---|---|---|
| Years | 30 | 29 | 28 | 27 | 26 | 25 | 24 | 23 | 22 | 21 |
The Foundation early cut
Retire from 55 before you meet the Rule of 85 or turn 65, and your benefit is cut 0.25% for each full month early (3% a year), for life. SDCL 3-12C-1111 (1/4 of 1% for each full month to the earlier of normal retirement age or reduction age); SDRS Actuarial Valuation (June 30, 2024), p. 56; Foundation Handbook (July 2024), p. 12 (3% a year, prorated for partial years, before age 65)
The handbook's example: 18 years, a $30,000 final average compensation, retiring at 62 on July 1, 2025. That's $8,415 a year less a 9% cut = $7,657.65. Our calculator: $7,657.65. With 18 years this member can't meet the Rule of 85 before 65, so both readings agree. Foundation Handbook (July 2024), p. 12, Early Retirement Benefit Example
The Foundation handbook says an early benefit is cut 3% a year before 65. State law (SDCL 3-12C-1111) and SDRS's actuary measure the cut, 0.25% a month, only up to the earlier of 65 or your Rule of 85 date. Retiring at 58 with 25 years: 6% under the law, 21% by the handbook's wording. The handbook says the law wins, so we use 6% and show both.
Example: retiring at 58 on July 1, 2026 with 25 years and a $50,000 final average compensation. With service frozen at 25 years, this member would meet the Rule of 85 on July 1, 2028, at 60.
| Reading | Cut | Yearly |
|---|---|---|
| State law (we use this)to the Rule of 85 date | 6% | $18,706 |
| Handbook wording3% a year to 65 | 21% | $15,721 |
The Foundation handbook describes the early retirement cut as 3% a year before age 65. State law and SDRS's actuary stop the cut at the date you would meet the Rule of 85, if that comes first. For members a few years short of the Rule of 85 the law gives a much smaller cut. We show the law's figure and the handbook's figure side by side.
What would settle it: An SDRS benefit estimate for a Foundation member who retires a few years before meeting the Rule of 85 (for example age 58 with 25 years).
The cut by age and service, both ways
For a benefit starting on an SDRS birthday. The handbook's figure depends only on age; the law's figure also depends on how close your service gets you to the Rule of 85.
| Start at | 15 yrs | 20 yrs | 23 yrs | 25 yrs | 27 yrs | Handbook |
|---|---|---|---|---|---|---|
| 55 | 30% | 30% | 21% | 15% | 9% | 30% |
| 56 | 27% | 27% | 18% | 12% | 6% | 27% |
| 57 | 24% | 24% | 15% | 9% | 3% | 24% |
| 58 | 21% | 21% | 12% | 6% | none | 21% |
| 59 | 18% | 18% | 9% | 3% | none | 18% |
| 60 | 15% | 15% | 6% | none | none | 15% |
| 61 | 12% | 12% | 3% | none | none | 12% |
| 62 | 9% | 9% | none | none | none | 9% |
| 63 | 6% | 6% | none | none | none | 6% |
| 64 | 3% | 3% | none | none | none | 3% |
Foundation members starting before 62 can also choose the level income option. Foundation Handbook (July 2024), pp. 12-13, Level Income Payment Option; SDCL 3-12C-1112
Generational members
No Rule of 85: your benefit is unreduced only at 67. You can start a reduced benefit from 57, cut 5% for each year before 67, prorated by full month. Generational Handbook (July 2024), p. 11, Early Retirement Benefits (5% a year, prorated for partial years, before 67); SDCL 3-12C-1207 (5% per full year, prorated for each additional full month); SDRS Actuarial Valuation (June 30, 2024), p. 56 (5/12 of 1% per full month) Generational Handbook (July 2024), p. 10 (unreduced only at normal retirement age); SDRS Actuarial Valuation (June 30, 2024), p. 56 (no special early retirement for Generational members)
| Start at | Cut | You keep |
|---|---|---|
| 57 | 50% | 50% |
| 58 | 45% | 55% |
| 59 | 40% | 60% |
| 60 | 35% | 65% |
| 61 | 30% | 70% |
| 62 | 25% | 75% |
| 63 | 20% | 80% |
| 64 | 15% | 85% |
| 65 | 10% | 90% |
| 66 | 5% | 95% |
The handbook's example: 30 years and a $30,000 final average compensation at 62 is $16,200 less 25% = $12,150 a year. Our calculator: $12,150. Generational Handbook (July 2024), p. 11, Early Retirement Benefit Example
- Generational members can start a reduced benefit at 57. It is reduced 5% for each year (prorated by month) before 67, so starting at 62 cuts it 25%.Generational Handbook (July 2024), p. 11; SDCL 3-12C-1207
See the cut at every age for your own numbers in the calculator. Related: what one more year adds, and the SDRS formula the cut is taken from.
Questions
What is the Rule of 85?
A Foundation member whose age plus credited service adds up to at least 85, at 55 or older, gets an unreduced benefit before 65. Generational members have no Rule of 85.
How much is the early retirement cut?
Foundation: 0.25% for each full month early (3% a year). Generational: 5% a year before 67, prorated by full month. The cut is permanent.
Is the Foundation cut measured to 65 or to the Rule of 85?
State law says to the earlier of 65 and the date you would meet the Rule of 85. The handbook words it as a cut before 65. For a member retiring at 58 with 25 years that's 6% by law and 21% by the handbook's wording. We use the law and show both.
Source: SDRS Class A Handbooks (Foundation and Generational members), July 2024, Foundation pp. 5, 10, 12-13; Generational pp. 10-11. Also: SDRS Actuarial Valuation (June 30, 2024) p. 56; SDCL §§ 3-12C-702, 3-12C-1105, 3-12C-1110, 3-12C-1111, 3-12C-1112, 3-12C-1203, 3-12C-1207. Last reviewed .