What is the SWP?
An SWP (Systematic Withdrawal Plan) sells a fixed rupee amount of your mutual fund units each month and credits the money to your bank. It is the retirement mirror image of a SIP, and the standard way retirees draw income from a corpus while the rest stays invested and growing.
The key number is your withdrawal rate. Draw less than your return and the corpus grows forever; draw more and it depletes — the calculator shows exactly when.
Formula & worked example
Each month the balance grows, then the withdrawal is taken out:
Worked example: a ₹1 crore corpus earning 8% with ₹50,000 withdrawn monthly. Annual withdrawal is ₹6 lakh — a 6% withdrawal rate against an 8% return, so the corpus keeps growing. After 20 years you would have drawn ₹1.2 crore and still hold roughly ₹1.5 crore.
How to use this swp calculator
- Enter the corpus available at the start of withdrawals.
- Set the monthly income you need in hand.
- Use a conservative return — 7–8% for a retiree's balanced portfolio, not 12%.
- Check the withdrawal rate: under 4–5% is generally sustainable for life.
Smart tips
- The classic safe withdrawal rate is about 4% a year. Above 7% most corpora deplete within 20–25 years.
- SWP is far more tax-efficient than dividends — only the capital-gain portion of each withdrawal is taxed.
- Keep 2–3 years of withdrawals in liquid or short-duration funds so a market crash never forces you to sell equity low.
- Raise your withdrawal with inflation, not with market gains. Fixed withdrawals lose about half their purchasing power in 15 years at 5% inflation.
Frequently asked questions
What is a safe SWP withdrawal rate?
Around 4% of the corpus per year is the widely used safe rate for a 30-year retirement. Between 5–6% is workable with a growth-tilted portfolio; above 7% risks running out.
How is SWP taxed?
Each withdrawal is treated as a redemption. Only the gain portion is taxed, at equity or debt rates depending on the fund and holding period — far better than a fully taxed interest payout.
Is SWP better than a fixed deposit for income?
Usually yes over long periods, because the corpus keeps growing and only gains are taxed. FDs are more predictable but the interest is fully taxable and rarely beats inflation.
Can I change the SWP amount later?
Yes, you can modify or stop an SWP at any time. Many retirees increase it every year or two to keep pace with inflation.
Want the theory behind the numbers? Read our retirement income guides on the Money Blog.