A Systematic Withdrawal Plan (SWP) lets you withdraw a fixed amount from a mutual fund investment every month while the remaining corpus stays invested and continues to earn returns. It is the withdrawal equivalent of SIP — where SIP builds a corpus over time, SWP depletes it in a structured, income-generating way.

The key difference from a bank FD: in an FD, you earn interest on the principal but the principal stays locked. In SWP, you withdraw from the corpus itself — principal + gains together. If your monthly withdrawal is lower than the monthly returns the corpus generates, the corpus actually grows over time. If higher, it depletes gradually. This makes the withdrawal rate relative to your return rate the most critical variable to get right.

How Long Will Your Corpus Last? (SWP Longevity Reference)

At 10% annual return (moderate equity mutual fund). ‘Indefinite’ means the corpus grows faster than withdrawals — it never depletes.

Corpus	₹10,000/month	₹20,000/month	₹30,000/month	₹50,000/month	₹1,00,000/month
₹25 lakh	Indefinite ✅	25 years	14 years	8 years	5 years
₹50 lakh	Indefinite ✅	Indefinite ✅	25 years	14 years	8 years
₹75 lakh	Indefinite ✅	Indefinite ✅	Indefinite ✅	20 years	11 years
₹1 crore	Indefinite ✅	Indefinite ✅	Indefinite ✅	Indefinite ✅	14 years
₹1.5 crore	Indefinite ✅	Indefinite ✅	Indefinite ✅	Indefinite ✅	Indefinite ✅
₹2 crore	Indefinite ✅	Indefinite ✅	Indefinite ✅	Indefinite ✅	Indefinite ✅

At 10% return, a ₹50 lakh corpus can sustain ₹20,000/month indefinitely — the corpus keeps growing. But ₹30,000/month will deplete it in 25 years. This ‘safe withdrawal rate’ threshold — where returns equal withdrawals — is the key number to find for your corpus.

How Much Monthly Income Can Your Corpus Generate?

Sustainable monthly SWP = corpus that grows or stays flat indefinitely. At 10% return, safe withdrawal ≈ 0.83% of corpus per month (10% ÷ 12).

Corpus	Sustainable SWP (10% return)	Sustainable SWP (8% return)	Sustainable SWP (12% return)
₹25 lakh	₹20,833/month	₹16,667/month	₹25,000/month
₹50 lakh	₹41,667/month	₹33,333/month	₹50,000/month
₹75 lakh	₹62,500/month	₹50,000/month	₹75,000/month
₹1 crore	₹83,333/month	₹66,667/month	₹1,00,000/month
₹1.5 crore	₹1,25,000/month	₹1,00,000/month	₹1,50,000/month
₹2 crore	₹1,66,667/month	₹1,33,333/month	₹2,00,000/month

‘Sustainable’ means the corpus neither grows nor depletes — purely living off returns. In practice, for a 25–30 year retirement, withdrawing slightly below the sustainable rate is recommended so the corpus also provides a buffer for inflation and market down years.

How to Use This Calculator

Enter Total Investment — your lump sum corpus in the mutual fund (e.g., ₹50,00,000)
Enter Monthly SWP Amount — the fixed amount to withdraw each month
Enter Expected Return Rate — use 8% for debt/conservative hybrid, 10% for balanced, 12% for equity-heavy fund
Enter Time Period — the number of years to project (use 25–30 for retirement planning)
Enable Annual Step-up (optional) — increases SWP by a % each year to account for inflation; 5–6% step-up is common
View Summary tab for total withdrawn, final fund value, and total wealth generated
View Schedule tab for year-wise opening balance, interest earned, SWP paid, and closing balance

Tip: If the Final Fund Value after 25 years is close to zero, your withdrawal rate is too high. Reduce monthly SWP or increase corpus. Aim for a Final Fund Value of at least 30–40% of original corpus after 20 years — this provides a buffer for market downturns.

SWP vs FD vs NPS Annuity — Which Is Better for Retirement Income?

All three provide regular post-retirement income but differ significantly in flexibility, returns, and tax treatment:

Factor	SWP (Mutual Fund)	Bank FD (Interest)	NPS Annuity
Monthly income	Flexible — you set the amount	Fixed interest payout	Fixed, set at time of purchase
Return potential	8–12% p.a. (market-linked)	6.5–7.5% p.a. (fixed)	5.5–7% p.a. (fixed by insurer)
Capital access	Full corpus accessible anytime	FD principal on maturity	Annuity corpus locked — no access
Inflation hedge	Yes — step-up SWP + corpus growth	No — fixed payout erodes over time	No — fixed payout for life
Tax on withdrawal	LTCG 12.5% on gains > ₹1.25L/year (equity funds); slab rate for debt	Fully taxable as per slab	Pension income taxable as per slab
Nominee/inheritance	Full remaining corpus to nominee	FD amount to nominee	Life annuity ends at death (unless joint)
Best for	Flexible, inflation-adjusted income	Simple, guaranteed fixed income	Guaranteed income for life — no corpus risk

SWP from equity mutual funds gives the best combination of income flexibility and corpus growth potential — but returns vary with markets. For retirees who cannot tolerate uncertainty in monthly income, a split strategy works well: use FD or annuity for fixed essential expenses (rent, utilities, groceries) and SWP for discretionary spending (travel, lifestyle). This way, the market-linked SWP corpus can grow during good years without affecting essential income.

Frequently Asked Questions (FAQ)

At 10% annual return, a corpus of ₹1 crore can sustain ₹83,333/month indefinitely. For exactly ₹50,000/month sustainably, you need approximately ₹60 lakh at 10% return. If you want a 25-year horizon (corpus depletes to zero at year 25), a smaller corpus works — approximately ₹50 lakh at 10% return can support ₹50,000/month for about 14 years. Use the calculator above to find your exact number.

Yes. Each SWP withdrawal is treated as a redemption. For equity mutual funds held over 1 year, gains are taxed as Long Term Capital Gains (LTCG) at 12.5% for amounts above ₹1.25 lakh per year (FY 2024–25 onwards). For debt mutual funds, gains are added to income and taxed at slab rate regardless of holding period. Since each monthly SWP redeems a small number of units, tax liability is usually modest unless the corpus is very large.

A commonly used rule: withdraw no more than your expected annual return ÷ 12 per month to keep the corpus stable. At 10% return, safe monthly withdrawal ≈ 0.83% of corpus. A slightly more conservative approach is the 4% annual rule — withdraw 4% of corpus per year (0.33%/month) to give a 25–30 year runway even with market variability. For a ₹1 crore corpus, 4% annual = ₹4 lakh/year = ₹33,333/month.

Annual step-up increases your monthly withdrawal by a fixed percentage each year — for example, 5% step-up means ₹20,000/month in year 1, ₹21,000 in year 2, ₹22,050 in year 3, and so on. This is designed to maintain purchasing power against inflation. If your expected inflation is 6%, a 5–6% step-up in SWP is recommended. The trade-off: higher step-up depletes the corpus faster — the calculator shows this visually in the schedule.

Yes, but for equity mutual funds, there is an exit load (usually 1%) if you redeem within 1 year of investment. Starting SWP within the first year means each withdrawal within that window incurs this exit load. To avoid this, either park the corpus in a liquid or overnight fund initially (no exit load), set up the SWP to start after 12 months, or use a fund category like balanced advantage or debt fund with no exit load for the SWP corpus.