How an SWP Works — and How This Calculator Models It
An SWP (Systematic Withdrawal Plan) is the opposite of an SIP. Instead of paying money in each month, you take money out — a fixed sum on a fixed date, straight from a mutual fund corpus you already own. The money that stays behind keeps earning returns. This is the standard playbook for living off a retirement corpus in India.
The calculator answers the two questions that actually matter at retirement: (a) "My corpus is ₹X. If I draw ₹Y a month, when does it run out?" and (b) "I need ₹Y a month for the next N years. How big does the corpus have to be on day one?" Use the mode toggle at the top of the input card to flip between them.
⚠ Heads up — this is a steady-return model, real markets aren't
This calculator assumes your portfolio earns the exact same return every single year. Real markets don't behave that way. If your actual return comes in 2–3% lower than what you typed, or if a bad market year hits early while you're already drawing money out, your corpus can run dry 5 to 10 years sooner than the number shown above. Always stress-test with a return 3% lower than your headline assumption before you commit to a withdrawal rate.
Good for / not ideal for
Good for: retirees living off a corpus, anyone who needs predictable monthly income from a lump sum, planning the drawdown phase after years of investing.
Not ideal for: emergency funds (use an FD instead), short-term cash needs of under 2 years (a savings account or liquid fund is safer), or anyone still in the accumulation phase building a corpus (use an SIP or Goal SIP).
The SWP Formula
- Balance — Corpus value at the end of month t
- i — Monthly return rate (annual return ÷ 12 ÷ 100)
- W — Monthly withdrawal amount
- If W > corpus × i, you eat into principal each month and the corpus depletes; if W < corpus × i, the corpus can grow even while you withdraw.
A Worked Example — ₹1 Crore corpus, ₹50,000/month at 8% return
Start with a ₹1 Crore corpus earning 8% p.a. and draw ₹50,000/month. In year one the corpus earns roughly ₹8 Lakh while you only pull out ₹6 Lakh — so the corpus actually grows for the first several years. The calculator shows it lasting 30+ years at this rate. Bump the withdrawal to ₹80,000/month and the math flips: you're pulling out ₹9.6 Lakh against ~₹8 Lakh in returns, so the corpus depletes in roughly 22–25 years. Push it to ₹1 Lakh/month and you're looking at 16–18 years before zero.
Pick Your Mode
- "How Long Will It Last?" — You're retired or close to it. You know what's in the account and you know what you want to spend each month. The calculator tells you when the well runs dry.
- "Corpus Needed" — You're still working but planning ahead. You know your target monthly income and how many years you want it to last. The calculator tells you the lump sum you need to retire with.
Tax on SWP Withdrawals
- Equity funds (≥65% equity) — Each withdrawal is split into capital + gain. Only the gain portion is taxed: LTCG 10% on gains above ₹1 Lakh/year (held >1 year); STCG 15% (held ≤1 year).
- Debt funds bought after 1 April 2023 — Entire gain portion is taxed at your income slab rate regardless of holding period.
- SWP is more tax-efficient than dividend payouts — you only pay tax on the gain portion of each withdrawal, not on capital.
- Use our Income Tax Calculator to estimate the tax impact at your slab.
Don't Have the Corpus Yet?
SWP is the drawdown phase, not the building phase. If you're still accumulating, run a SIP Calculator to project how a monthly contribution grows, a Step-up SIP if your contributions rise with salary, or a Goal SIP if you already know the target corpus and need the SIP figure. Pair it with an NPS Calculator for the retirement-specific tax break.
Practical Rules for Running an SWP
- Start at 4% a year, not higher. Annual withdrawals at or below 4% of the starting corpus have survived 30+ year retirements across nearly every historical market window. At ₹1 Crore that's about ₹33,000/month — a sane baseline before you stretch.
- Account for inflation explicitly. ₹50,000 today buys roughly ₹25,000 worth of goods in 12 years at 6% inflation. Plan to step the withdrawal up 5–7% a year, and stress-test the calculator with that higher future withdrawal.
- Sequence-of-returns risk is the silent killer. A 30% crash in year 2 of retirement does far more damage than the same crash in year 15. Don't draw aggressively from equity during a bear market.
- Hold 2–3 years of expenses in safe assets. Liquid funds, short-duration debt, or even an FD ladder. When equity tanks, draw from this bucket and let equity recover.
- Re-check the runway every year. Actual portfolio values diverge from projections fast. Recalculate each January with the real balance.
- Don't keep 100% in equity after retirement. A 40–60% equity / 60–40% debt split is the typical sweet spot.
Frequently Asked Questions
How is SWP taxed?
Each withdrawal is split by the fund house into a capital portion (your original money, no tax) and a gains portion (taxable). For equity funds held over a year, gains are LTCG — taxed at 10% above ₹1 Lakh of total LTCG per financial year. Held under a year, gains are STCG at 15%. For debt funds bought after 1 April 2023, the gains portion is added to your income and taxed at your slab rate regardless of holding period. SWP is meaningfully more tax-efficient than dividend payouts, where the entire payout is taxed at slab.
Can I change the SWP withdrawal amount later?
Yes. SWP is not a contract — it's just a standing instruction to the AMC. You can stop, pause, increase, or decrease the monthly amount any time through the fund house's portal or app. Many retirees step the withdrawal up 5–7% each year to keep pace with inflation, or temporarily cut it during a bad market year to protect the corpus. There's no penalty for changing it.
What return rate should I assume for retirement?
Be conservative — you can't afford to be wrong on the high side once you've stopped earning. For a typical post-retirement 40/60 equity-debt split in India, 8–9% p.a. is a defensible long-term assumption. Pure debt: 6–7%. Aggressive 60/40 equity-heavy: 10–11%. Always stress-test the runway 2–3% below your headline assumption before you finalise the withdrawal amount.
SWP vs annuity — which is better?
An annuity (from LIC or a private insurer) gives you a guaranteed income for life, but the payout rates are low (typically 5.5–7%) and the corpus is locked away — your heirs usually get nothing. SWP typically delivers higher effective income because the corpus keeps earning market returns, you can change the amount any time, and whatever is left passes to your heirs. The trade-off: SWP carries market risk and corpus-runout risk; annuities don't. Many retirees split — a small annuity to cover essential expenses, an SWP for the rest.
What is the 4% rule and does it work in India?
The 4% rule (Bengen, 1994) says: withdraw 4% of the starting corpus in year one, then increase by inflation each year — and historically that survived 30+ year retirements in 95%+ of US market scenarios. In India, with higher equity returns but also higher inflation, the same principle holds at roughly 4–4.5%. On a ₹1 Crore corpus that's ₹33,000–37,500/month as a safe starting point.
What is sequence-of-returns risk?
The risk that bad returns hit in the early years of withdrawal — the most damaging time. A 30% crash in year 2 means you're selling units at the bottom while drawing income, which gut-punches the compounding for the rest of retirement. The same crash in year 15 barely registers. Mitigate by holding 2–3 years of expenses in liquid/debt funds and pulling from there during equity downturns.
Can I do SWP from any mutual fund?
Yes — almost every open-ended mutual fund in India supports SWP. Log in to the AMC's site or app, pick the scheme, set the monthly amount, the date, and the destination bank account. Minimum SWP is typically ₹500–₹1,000/month. Avoid running SWP from ELSS units that are still within their 3-year lock-in.
Does this calculator save my data?
No. All calculations happen entirely inside your browser using JavaScript. Nothing is sent to any server. Your inputs are encoded in the URL when you share — your data never leaves your device.