SWP Calculator
Monthly income from a mutual fund: the balance left, how long the money lasts, the highest safe withdrawal, and withdrawals that rise with inflation.
₹50 lakh earning 8% a year can pay ₹30,000 a month for 20 years and still be worth about ₹62,34,814 at the end; the most it can pay for exactly 20 years is about ₹40,957 a month. Raise the withdrawal 6% a year for inflation and the same ₹30,000 start runs out in about 16 years. The calculator shows the balance year by year and when the money runs out.
A systematic withdrawal plan (SWP) sells a fixed amount of mutual fund units every month and pays it to your bank account. It is the reverse of a SIP and a common way to draw a retirement income from a corpus while the rest stays invested.
The key question is whether the withdrawals outlast you. The calculator tracks the balance month by month, tells you if and when it reaches zero, and solves for the highest monthly withdrawal the corpus can pay for your chosen period.
How the SWP balance is calculated
Each month the balance earns the monthly return, then the withdrawal is paid: Bt = Bt−1 × (1 + i) − W. The monthly return i = (1 + R)1/12 − 1 compounds to exactly the annual return R. If the withdrawal rises once a year by g, year k's withdrawal is W × (1 + g)k.
The 'highest monthly withdrawal' figure is found by search: the largest first-year withdrawal that leaves the balance just above zero at the end of the period.
How long does the money last?
₹50 lakh at 8% a year, flat monthly withdrawals:
| Monthly withdrawal | Withdrawal rate | Money lasts |
|---|---|---|
| ₹20,000 | 4.8% | lasts 40+ years |
| ₹30,000 | 7.2% | lasts 40+ years |
| ₹40,000 | 9.6% | 21 years 3 months |
| ₹50,000 | 12.0% | 13 years 5 months |
When the yearly withdrawal is below the yearly return, the balance keeps growing; above it, the corpus is consumed and the decline accelerates. That threshold is the first number to check.
Inflation: why a flat SWP is not enough
A flat ₹30,000 buys about half as much after 12 years of 6% inflation. Raising it 6% a year keeps its value, but from the same ₹50 lakh at 8% the money then runs out in about 16 years instead of lasting 20 years with money to spare. Use the 'yearly increase' box to test this; it is the most common mistake in retirement income plans.
The '4% rule' (withdraw 4% of the starting corpus, then raise it with inflation) comes from US data. Indian inflation has been higher, so test lower starting rates over a 30-year horizon.
Sequence risk
The calculator assumes a steady return. Real funds rise and fall, and a fall in the early withdrawal years does lasting damage, because units are sold at low prices to pay the income. Many retirees hold 2-3 years of withdrawals in a debt or liquid fund and draw the SWP from there, refilling it from equity in good years.
How SWP is taxed
Each withdrawal is a redemption of units, and only the gain inside it is taxed, not the whole amount. Units are redeemed first-in, first-out. Early on, most of each withdrawal is your own capital coming back, which is why an SWP is usually more tax-efficient than a dividend (IDCW) option, where the entire payout is taxed at your slab rate.
Equity mutual funds (and stocks) held over 12 months: long-term gains above ₹1.25 lakh in a financial year are taxed at 12.5%; held 12 months or less: 20%. Health and education cess of 4% applies on top. Debt funds bought on or after 1 April 2023 are taxed at your slab rate however long you hold them.
SIP + SWP
A common plan: build a corpus with a SIP over your working years (SIP calculator), then draw it down with an SWP. Plan the SWP from the SIP's after-tax value, in today's rupees.
Key takeaways
- ₹50 lakh at 8% pays ₹30,000 a month for 20 years with about ₹62,34,814 left; the 20-year maximum is about ₹40,957 a month.
- Withdrawals below the yearly return let the corpus keep growing.
- Raising the withdrawal with inflation shortens how long the money lasts sharply.
- Only the gain inside each withdrawal is taxed, which usually beats a dividend option.
Frequently asked questions
What is an SWP?
A systematic withdrawal plan: the fund house redeems units worth a fixed amount every month (or quarter) and pays it to your bank account, while the rest of the investment stays invested.
How much monthly income can ₹50 lakh give through SWP?
At 8% a year, about ₹40,957 a month for 20 years, leaving nothing at the end; ₹35,719 a month for 30 years. Withdraw less and the corpus can last indefinitely: up to about ₹32,170 a month, the monthly return covers the withdrawal.
What is an SWP calculator with inflation?
One that raises the withdrawal every year so it keeps its purchasing power. Enter the yearly increase (say 6%); the calculator shows how much sooner the money runs out.
Which is better, SWP or dividend (IDCW)?
For most investors, an SWP. You choose the amount, and only the gain portion of each withdrawal is taxed. IDCW payouts depend on the fund and are fully taxed at your slab rate.
How is SWP taxed?
Each withdrawal is a redemption; the gain on the units sold is taxed by holding period and fund type. Equity mutual funds (and stocks) held over 12 months: long-term gains above ₹1.25 lakh in a financial year are taxed at 12.5%; held 12 months or less: 20%. Health and education cess of 4% applies on top. Debt funds bought on or after 1 April 2023 are taxed at your slab rate however long you hold them.
Which fund is best for SWP?
That depends on the period and your risk tolerance. Debt and conservative hybrid funds are steadier for the income years; equity funds return more over long periods with larger falls. Many retirees split the corpus between them. This calculator does not recommend funds.
Can I start an SWP immediately after investing?
Yes, but withdrawals from an equity fund within 12 months are short-term gains, and many funds charge an exit load in the first year. Check the scheme's exit load.
What is a safe SWP withdrawal rate?
One below the return you can rely on, after inflation. The US '4% rule' assumed US inflation and returns; in India, with higher inflation, test 3-5% of the starting corpus over a 30-year horizon with the inflation box set.