Should SWP withdrawals adjust for inflation?

Yes - fixed withdrawals lose purchasing power. At 3% inflation, year-30 withdrawals need to be ~2.4x year-1 amounts to maintain lifestyle.

SWP Calculator | Systematic Withdrawal Plan

Q: What is a sustainable withdrawal rate?

The 4% rule from the Trinity Study: withdrawing 4% of initial corpus per year (inflation-adjusted) historically lasted 30+ years for a balanced portfolio.

Q: How does SWP differ from a pension or annuity?

A pension pays a guaranteed amount but you give up principal access. SWP keeps you in control: you choose withdrawal amounts and pass remaining corpus to heirs, but bear market risk.

Q: What if my corpus runs out earlier than expected?

Keep 1-2 years of expenses in cash, reduce withdrawals if a bear market hits early, and consider part-time income in the first 5-10 years of retirement.

Currency

Total Corpus (Investment Amount)

Monthly Withdrawal Amount

Expected Annual Return (%)

Withdrawal Duration (Years)

Leave blank to calculate when corpus depletes

Annual Inflation Rate (%) — optional

Withdrawal increases by this % each year to keep up with cost of living

About the SWP (Systematic Withdrawal Plan) Calculator

A Systematic Withdrawal Plan (SWP) allows investors to withdraw a fixed amount from a mutual fund or investment corpus at regular intervals — typically monthly. It is the reverse of a SIP (Systematic Investment Plan) and is widely used by retirees to generate a steady income stream from accumulated savings. This calculator helps you determine how long your corpus will last, total interest earned while withdrawing, and the year-wise depletion or growth of your portfolio.

How to Use

Enter your total investable corpus (retirement savings or lump-sum investment).
Set the monthly withdrawal amount you need for living expenses.
Enter the expected annual return your corpus will earn while invested.
Optionally set a fixed duration, or leave it blank to auto-calculate when the corpus depletes.

Formula Used

        Balance(m) = Balance(m-1) × (1 + r) − W

        where r = Annual Rate / 12 / 100

        W = Monthly Withdrawal

        m = month number

Each month the corpus earns interest first, then the withdrawal is deducted. If returns exceed the withdrawal, the corpus grows indefinitely. If withdrawals exceed returns, the corpus depletes over time.

Understanding Your Results

Total Withdrawn Sum of all monthly withdrawals over the entire period. This is the total income received from your investment.

Remaining Corpus Amount left in your portfolio at the end of the specified duration. A positive remaining corpus means your investment outlasted the plan period.

Interest Earned Total returns generated on the corpus during the withdrawal period. Higher returns mean the corpus lasts longer and may even grow while you withdraw.

Break-even Rate If annual return = (Monthly Withdrawal / Corpus) × 12 × 100%, the corpus never depletes. Use this as a benchmark when choosing between growth and balanced funds.

SWP vs SIP

SIP Invest a fixed amount monthly into a fund to accumulate wealth over time (wealth building phase).

SWP Withdraw a fixed amount monthly from an accumulated corpus (wealth distribution / retirement phase).

Tax Efficiency of SWP

Each SWP instalment in a mutual fund is treated as a partial redemption. Only the capital gains component (not the principal) is taxable. This makes SWP more tax-efficient than FD interest, where the entire interest is taxable as income.

Frequently Asked Questions

What is a sustainable withdrawal rate (the "4% rule")?

The Trinity Study found that withdrawing 4% of your initial corpus per year (adjusted for inflation) historically lasted 30+ years for a 60/40 stock/bond portfolio across most market scenarios. Withdraw at higher rates and depletion risk rises sharply.

How does SWP differ from a pension or annuity?

A pension/annuity pays a guaranteed amount but you give up access to the principal and any inheritance. SWP keeps you in control: you choose how much to withdraw, change it any time, and pass the remaining corpus to heirs. The trade-off is market risk — your corpus can run out if returns disappoint.

What if my corpus runs out earlier than expected?

Build flexibility: keep 1–2 years of expenses in cash/liquid funds as a buffer to avoid selling during downturns, reduce withdrawals if a bear market hits early, and consider a part-time income source for the first 5–10 years of retirement (the highest-risk period).

Should I adjust withdrawals for inflation?

Yes — fixed withdrawals lose purchasing power over time. Use the inflation-rate input above to model rising withdrawals. A 30-year retirement at 3% inflation means your year-30 withdrawal needs to be ~2.4× your year-1 amount to maintain the same lifestyle.

Important Note

SWP calculations assume a constant annual return, which may not reflect actual markets. Equity funds can deliver negative returns in some years, reducing corpus faster than projected. Maintain 1–2 years of expenses in liquid funds as a buffer. Consult a qualified financial advisor before setting up an SWP.

Share: Suggest a Calculator