Hey John, I use SST with RDS for Postgres. I have my lambdas within the vpc during development (I'm on a VPN) and it works well. I found it tricky to set up, but that was due to me having to learn more about AWS networking, not SST. Although, some of that could be avoided by placing the lambdas outside the vpc as @thdxr recommends. I've also used a local docker container with Postgres installed, which also worked well.
Plenty of us do this, so don't be shy about asking questions as you get started. It's a pretty awesome setup!