SWP Calculator

What is an SWP?

A Systematic Withdrawal Plan (SWP) is the mirror image of a SIP: instead of investing a fixed amount every month, you redeem a fixed amount from your mutual fund holding while the balance stays invested and keeps compounding. It is the standard way in India to turn a retirement corpus, an inheritance, an ESOP payout or a maturing investment into a predictable monthly income — without handing control to a fund manager's dividend decisions or locking your money into an annuity.

The withdrawal rate decides everything

Whether your money lasts a decade or lasts forever comes down to a single number: the annual withdrawal rate — your yearly withdrawals expressed as a percentage of the corpus. Keep that rate below your return and the untouched balance grows faster than you spend it, so the corpus can outlive you. Cross your return, and every month you dip into principal — which shrinks the base that earns returns, so the depletion accelerates the longer it runs.

Here is how the same ₹1 crore at an 8% expected return behaves at different withdrawal rates:

A widely used rule of thumb is to keep withdrawals in the 4–6% range for a corpus that must last 25 years or more, leaving a cushion for inflation and for weak-market years.

How much monthly income will my corpus give?

The question most people actually arrive with is the reverse of the one above: not "what happens at 4%?" but "I have ₹10 lakh — how much can I withdraw?" The table below answers it directly. Each figure is the largest flat monthly withdrawal that the corpus can sustain for the whole period, calculated with the same engine as the calculator above.

* The final column is the largest withdrawal that leaves the corpus intact, so the income can continue indefinitely — provided the fund really does average 8%. It sits a little below 8% of the corpus a year (₹66,220 a month per crore, not ₹66,667) because each withdrawal leaves at the start of the month and so misses that month's return. It is the safest of the four columns and the smallest for a reason.

Two cautions on reading this table. Every row assumes a steady average return, which real funds do not deliver — see sequence-of-returns risk below. And every figure is a flat rupee amount, so its purchasing power falls each year; ₹8,300 a month buys noticeably less after a decade. To hold real income steady, set the Annual Increase field to your expected inflation rate and the calculator will step the withdrawal up each year, which meaningfully shortens how long the corpus lasts.

A worked example

Suppose you invest ₹50 lakh in a balanced fund earning 8% and withdraw ₹30,000 every month for 20 years. Because ₹30,000/month is only 7.2% of the corpus a year — and each withdrawal comes out at the start of the month while the rest keeps compounding — you draw a total of ₹72 lakh over 20 years and still finish with a balance of about ₹68.5 lakh. Along the way your ₹50 lakh generated roughly ₹90 lakh of returns, paid your income, and grew. That is the counter-intuitive power of staying under your return rate. Build that starting corpus with a disciplined lumpsum investment or a monthly SIP, then flip it into an SWP when you retire.

SWP vs FD interest vs dividend plan

The biggest edge of an SWP is tax treatment. Every withdrawal is a redemption of units, so only the gains portion of each rupee is taxable — not the capital you are simply getting back. Contrast that with an FD, where the entire interest is taxed at your slab rate, or a fund's dividend (IDCW) option, where the whole payout is taxed at slab.

If you would rather have a guaranteed monthly cheque than a market-linked one, the Post Office Monthly Income Scheme pays a fixed amount every month for five years and returns your capital untouched. It yields less than a well-run SWP and the income never rises with inflation — but it carries none of the sequence-of-returns risk described below.

For equity funds, redemptions after 12 months qualify for long-term capital-gains treatment and the ₹1.25 lakh yearly exemption; debt funds bought on or after 1 April 2023 are always taxed at slab, with no long-term benefit. Because only part of each SWP redemption is gain, your effective tax rate is usually far below what you would pay on the same income from an FD. Check your slab with our Income Tax Calculator and compare guaranteed payouts using the FD Calculator. Unlike a dividend plan, an SWP also puts you in charge of the amount and timing — you can raise, pause or stop it whenever you like.

Sequence-of-returns risk

A fixed-rate projection assumes a smooth 8% every single year. Real markets rarely oblige. If a sharp fall lands in the first few years of your SWP — while the corpus is largest and you are still selling units to fund withdrawals — you crystallise losses on more units and leave far less invested to ride the eventual rebound. Two retirees with identical average returns can end up with wildly different outcomes purely because of the order in which good and bad years arrived. That is why a withdrawal which looks perfectly safe on paper can still fail in practice, and why cushioning early volatility matters more than chasing the highest headline return.

Which funds suit an SWP?

• Hybrid and balanced-advantage funds — the usual first choice: enough equity for growth, enough debt to soften the crashes.
• Debt or conservative-hybrid funds — for retirees who value stability and predictable withdrawals over aggressive growth.
• Pure equity funds — only with a long horizon and a spending buffer, because a bad early sequence can do lasting damage.

A common approach is a two-bucket setup: keep two to three years of withdrawals in a liquid or debt fund, run the SWP out of that bucket, and let a separate equity pot grow untouched — refilling the safe bucket in the good years.

When should you start?

Time your first withdrawal for at least 12 months after investing. That clears the exit-load window on most funds (typically a 1% charge if you redeem within a year) and, for equity funds, pushes your gains into the lower long-term capital-gains bracket. Start an SWP too early and you can pay an exit load and the higher 20% short-term capital-gains rate on equity — a double hit that quietly erodes the corpus before it has a chance to compound.

Keep pace with inflation

A ₹50,000 monthly income feels comfortable today but buys far less in 15 years. This is the single biggest reason retirement plans fail, and most SWP calculators hide it by holding your withdrawal flat forever. Set the Annual Increase slider above to model a withdrawal that rises each year — 6% is a reasonable long-run inflation assumption for India.

So treat any flat-withdrawal projection as the optimistic case. Start below the maximum "safe" figure to leave headroom, and re-check the plan every year. To see how much your income needs to grow, use the Inflation Calculator; if you are still building the retirement pot, the NPS Calculator shows how a pension corpus stacks up alongside your mutual-fund savings.