Year by year
| Year | Monthly withdrawal | Withdrawn that year | Total withdrawn | Corpus left |
|---|
What is a SWP?
A Systematic Withdrawal Plan is the reverse of a SIP. You hold a corpus in a mutual fund and instruct the fund house to redeem a fixed amount every month and send it to your bank account. The rest stays invested and keeps earning. It is the standard way to turn a retirement corpus, or any large sum, into a monthly income without selling everything at once.
How the SWP calculator works
Each month the corpus earns one month of return, then the withdrawal is taken out. If the return on the remaining corpus exceeds the withdrawal, the corpus grows; if not, it shrinks and eventually runs out. The page runs this month by month and shows you the balance at the end of each year, and the exact year the money runs out if it does.
The safe withdrawal question
The number that matters is the withdrawal as a percentage of the corpus. Withdrawing 4% a year, which is ₹33,000 a month from ₹1 crore, is widely used as a starting point for a corpus that should last 30 years. Withdraw 8% and most corpora are gone within 15 to 20 years unless returns are unusually high. Move the withdrawal slider and watch the year the money runs out change; it is the most useful thing on this page.
SWP vs fixed deposit interest
A fixed deposit pays interest and leaves the principal untouched, but the interest is fully taxed at your slab and does not grow with inflation. An SWP from an equity or hybrid fund is taxed only on the gains portion of each withdrawal, and the remaining corpus can keep growing. The trade-off is that fund returns vary year to year, so the SWP needs a buffer; one or two years of withdrawals in a liquid fund is a common cushion.
How SWP withdrawals are taxed
Each withdrawal redeems units, and only the gain on those units is taxed, not the whole amount. Units are redeemed oldest first. For equity funds, units held over 12 months are long-term gains, taxed at 12.5% above ₹1.25 lakh of gains a year; in the early years of an SWP the gain portion is small, so the tax is small. Debt funds bought after April 2023 are taxed at slab rate. Confirm the current year's rules; they change with the Budget.
Common questions
How much can I withdraw from ₹1 crore every month?
At 8% return, ₹1 crore earns about ₹66,000 a month, so a flat ₹60,000 a month never runs out. ₹80,000 a month lasts about 23 years flat, but only 13 years if you raise it 6% a year for inflation.
Can the SWP amount be increased later?
Yes. You can change or stop the instruction at any time with the fund house. Many people set a flat amount and revise it every few years rather than automating the increase.
Which funds are suitable for SWP?
Hybrid and balanced-advantage funds are the usual choice because they are less volatile than pure equity. Pure equity funds are riskier for a withdrawal plan because a bad first few years can permanently shrink the corpus.
Is SWP better than a monthly dividend plan?
For most people, yes. Dividends (now called IDCW) are taxed fully at your slab and are at the fund's discretion; an SWP gives you a fixed amount on a fixed date and is taxed only on the gain portion.