SWP Calculator: Turning a Lump Sum Into a Monthly Income
A Systematic Withdrawal Plan (SWP) is the mirror image of a SIP: instead of investing a fixed amount every month, you withdraw a fixed amount every month from an existing corpus, while the remaining balance stays invested and continues earning returns. It's a common way to convert a retirement corpus, or any large lump sum, into a regular income stream.
How it works
Each month, two things happen to your corpus: it earns a return (based on wherever it's invested), and then your fixed withdrawal is deducted. If the return earned exceeds the withdrawal, your corpus can actually grow even while you're drawing an income from it. If the withdrawal exceeds the return, the corpus shrinks — and if you're withdrawing too aggressively, it can run out well before you expected.
The core question an SWP calculator answers
Given your corpus, expected return rate, and desired monthly withdrawal, how many years will the money actually last? This is the single most useful number an SWP calculator produces — it turns "I want ₹50,000 a month" into a concrete answer like "that lasts 18 years at a 9% return" rather than an open-ended assumption.
Why the withdrawal rate matters more than the corpus size
It's tempting to focus on the corpus number, but the withdrawal rate — what percentage of the corpus you draw annually — is what actually determines sustainability. A withdrawal rate close to or above your expected return rate depletes the corpus quickly, no matter how large it is. A more conservative rate can let the corpus last indefinitely, sometimes even growing over the withdrawal period.
Don't forget inflation
A fixed ₹50,000 withdrawal today won't cover the same expenses in 10 years. A realistic SWP plan increases the withdrawal amount over time to keep pace with inflation — which means the corpus needs to work harder than a simple flat-withdrawal projection suggests. Always check the inflation-adjusted version of the calculation, not just the flat one.
Model your own numbers with iCalculator's SWP Calculator — it shows year-by-year balance and total withdrawals, including the effect of inflation-linked withdrawal increases.
Frequently asked questions
What withdrawal rate is considered safe for an SWP?
It depends on your expected returns, but a widely referenced starting point is withdrawing around 4% of the corpus annually and adjusting for inflation — always verify this against your own return assumptions and time horizon rather than using it as a fixed rule.
Can my corpus grow even while I'm withdrawing from it?
Yes, if the return your corpus earns exceeds your withdrawal rate in a given period, the balance can grow even after the withdrawal is deducted — this is common in years with strong market returns.
Should my SWP withdrawal amount increase every year?
Generally yes — a fixed withdrawal amount loses purchasing power to inflation over time. Increasing the withdrawal annually to match inflation keeps your real income stable, though it does mean the corpus needs to sustain a higher withdrawal each year.