Systematic Withdrawal Plan projection.
Corpus lasts
—
SWP is the retirement-income side of mutual funds
A SIP builds a corpus. A Systematic Withdrawal Plan does the reverse: it pays you a fixed amount every month out of that corpus while the remaining balance keeps earning a return. Retirees use it as a self-managed pension, taking, say, ₹30,000 or ₹50,000 a month from an equity or hybrid fund. The crucial number is whether your monthly return covers your monthly withdrawal. If it does, the corpus is effectively perpetual. If it does not, you are eating into capital, and this calculator tells you exactly how many years the money lasts before it runs out.
The break-even that decides everything
The logic is a single comparison. At a 9% expected return, a ₹50 lakh corpus earns about ₹37,500 in the first month. If you withdraw less than that, the balance grows and the SWP runs indefinitely. The default ₹30,000 withdrawal is comfortably below ₹37,500, so the corpus never depletes. Push the withdrawal above the monthly return and the picture changes fast.
Worked example: ₹50 lakh, ₹50,000 a month, 9% return
Now raise the withdrawal to ₹50,000 a month against the same ₹50 lakh at 9%. The first month earns about ₹37,500, so you are drawing ₹12,500 more than the fund makes. Each month the gap eats into capital, slowly at first, then faster as the shrinking balance earns less. The corpus lasts about 15 years and 6 months before it hits zero.
| Input | Value |
|---|---|
| Starting corpus | ₹50,00,000 |
| Monthly withdrawal | ₹50,000 |
| Expected return | 9% a year |
| First-month return | about ₹37,500 |
| Corpus lasts | 15 years 6 months |
Why an SWP beats a dividend payout on tax
This is the part most retirees miss. Each SWP instalment is a partial redemption, made up of some of your original capital and some gain. Only the gain portion is taxed, and in the early years the gain inside each withdrawal is small, so the effective tax is low. For an equity fund held long term, the gain is taxed as LTCG at 12.5% but only on aggregate gains above ₹1.25 lakh in a financial year, the rate that applies after 23 July 2024. Compare that with the old dividend-payout option, where the entire payout is taxed at your slab rate. For someone in the 30% bracket the difference is large, which is why an SWP from a growth-option fund is the more tax-efficient way to draw a regular income.
The risk a steady-return chart hides
This calculator, like every SWP tool, assumes a constant return every month. Real markets do not behave that way, and the order in which good and bad years arrive matters enormously once you are withdrawing. This is sequence-of-returns risk. Imagine two retirees who both average 9% over twenty years. The one who hits a sharp market fall in the first two years, while drawing ₹50,000 a month, sells units at depressed prices early, permanently shrinking the base that has to recover. The one who gets the same bad years late is far safer, because by then years of withdrawals have already come out at higher prices. The averages are identical; the outcomes are not. The practical defences are concrete. Keep two to three years of planned withdrawals in a liquid or short-duration fund so you are never forced to sell equity in a downturn. Hold the bulk in a balanced or hybrid fund rather than pure equity to soften the swings. And review the withdrawal each year, trimming it after a weak market so the corpus is not drained at the worst possible time. A flat-line projection is a useful planning tool, not a promise.
What is a safe withdrawal rate in India?
Be conservative. A 9% return is an expectation, not a guarantee, and equity returns are volatile. If you withdraw right at the break-even, a couple of bad market years early in retirement can permanently damage the corpus, a risk known as sequence-of-returns risk. Many planners suggest drawing 4% to 6% of the corpus a year from a balanced portfolio, leaving a buffer so a downturn does not force you to sell more units at low prices.
Can I change the withdrawal amount later?
Yes. An SWP is just an instruction to your fund platform and you can increase, decrease, pause, or stop it at any time. In practice a sensible approach is to review the withdrawal every year against the corpus balance and the markets, trimming it after a weak year to extend longevity.