How the SWP calculator works
The calculator simulates the plan one month at a time:
- At the start of each month, the withdrawal is taken out of the balance.
- What's left grows for the month at the monthly equivalent of the yearly return.
- Every 12 months, the withdrawal goes up by the step-up percentage, if you set one.
- If the balance can't cover a full withdrawal, that month's payment is whatever is left, and the plan ends.
Example: ₹10,00,000 invested at 8% a year, withdrawing ₹10,000 a month for 10 years. The monthly rate is 1.08^(1/12) − 1 ≈ 0.643%. You take out ₹12,00,000 in total, more than you put in, and about ₹3,46,093 is still invested at the end.
Sustainable withdrawal rates
Whether the money lasts depends mostly on how much you withdraw each year compared with the lump sum. The same ₹10,00,000 at 8% a year, over 30 years:
| Monthly withdrawal | Per year, % of lump sum | Result after 30 years |
|---|---|---|
| ₹6,000, no step-up | 7.2% | ₹15.57 lakh left |
| ₹8,000, no step-up | 9.6% | Runs out in month 251 (year 21) |
| ₹15,000, rising 10% a year | 18% | Runs out in month 67 (year 6) |
Withdrawing less than the fund earns lets the balance keep growing; withdrawing more eats into capital, slowly at first and then quickly. A yearly step-up protects your spending power against inflation but shortens how long the money lasts. For a long retirement, it's worth testing a lower rate, such as 3–5% of the starting amount a year, because real returns vary from year to year and a bad run early on can't be undone. Try a cautious return as well as a hopeful one.
SWP vs FD interest payouts
| SWP from a mutual fund | FD with monthly or quarterly interest | |
|---|---|---|
| Income | You choose the amount and can change or stop it | Fixed by the deposit rate |
| Capital | Can rise or fall with the market; withdrawals may use capital | Stays the same; only interest is paid out |
| Returns | Not guaranteed | Fixed for the term |
An FD payout never touches your capital but doesn't grow with inflation. An SWP can pay more and keep part of your money growing, but the fund's value moves with the market. Compare with the FD calculator, and see how a corpus is built in the first place with the SIP calculator.
How SWP withdrawals are taxed
Each SWP payment is a redemption of fund units. Part of it is your original investment and part is gain; only the gain part is taxed, as capital gains. The rate depends on the type of fund and how long you held the units being redeemed. Check the current rules for your fund before you start.
Frequently asked questions
What is an SWP?
How long will my money last with an SWP?
Is the SWP return guaranteed?
Why does the calculator take the withdrawal at the start of the month?
How is an SWP taxed?
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