SWP Calculator

An SWP is the mirror image of a SIP — instead of investing a fixed amount each month, you withdraw a fixed amount from an existing mutual fund or investment corpus. The remaining balance continues to earn returns. SWPs are popular for retirees who want a regular monthly income from their accumulated corpus while still earning growth on what's left.

Each month, the corpus first grows at the monthly equivalent of the annual return rate, then your fixed monthly withdrawal is deducted. The cycle continues until the corpus runs out (depletion) or until the project tenure ends. The math is the inverse of a SIP — early withdrawals leave more money to compound, just as early SIP contributions get more time to compound.

Roughly 3.5% to 4% of your initial corpus per year is considered sustainable for a 30-year retirement at typical equity returns. This 'safe withdrawal rate' (SWR) comes from William Bengen's research on US markets. For India — where inflation is structurally higher than the US — many planners suggest staying closer to 3.5%, especially in early retirement, and adjusting upward only after 3-5 years of confirmed corpus growth.

Each withdrawal is treated as a redemption. Equity funds (≥65% equity): gains over ₹1.25L/year held >1 year are LTCG at 12.5%; held ≤1 year are STCG at 20%. Debt funds (post April 2023): gains taxed at slab rate. SWP is more tax-efficient than dividend plans because (a) only the gain portion of each withdrawal is taxable (FIFO method), and (b) you control the realisation timing. For a ₹50K monthly SWP from an equity fund, you might pay zero tax for the first few years thanks to the ₹1.25L LTCG threshold.

SWP advantages: potentially higher long-run returns (10-12% equity vs 7% FD), tax efficiency (only gain taxed, not principal), capital preservation if return > withdrawal rate. FD interest advantages: zero risk, predictable monthly amount, no chance of corpus depletion. A common retirement strategy: keep 3-5 years of expenses in FDs and short-term debt, the rest in equity funds with an SWP for long-term inflation protection.

The calculator stops withdrawals when the balance hits zero and reports the year of depletion. In real life, this is the worst-case retirement outcome — running out of money. To avoid it: start with a realistic withdrawal rate, allocate enough to growth assets (equity), and re-evaluate each year. If markets crash early in retirement, consider temporarily reducing withdrawals — this 'sequence-of-returns risk' is the single biggest threat to a successful SWP.

Yes — and this calculator currently models a flat withdrawal. In reality, you'd want to step the withdrawal up by ~5-6% per year to maintain purchasing power. The flat model here gives you the maximum possible duration; an inflation-adjusted SWP will deplete faster. A safe starting point is to withdraw 0.5-1% less than your assumed real (after-inflation) return.