What is an SWP?
A Systematic Withdrawal Plan, or SWP, is the reverse of a SIP. Instead of putting a fixed amount into a mutual fund every month, you take a fixed amount out. The fund redeems enough units to pay you, and the rest of your money stays invested and keeps earning returns.
For anyone planning early retirement, this is the stage that matters most. Building a corpus is only half the job; the other half is drawing an income from it without running out. An SWP is one of the most common ways retirees in India turn a lump sum into a monthly paycheque.
What this calculator tells you
It answers two questions about the same corpus:
- How long will my money last? Enter a corpus, a monthly withdrawal and a return, and see the month the corpus runs out, or how much remains at the end of your planning period.
- How much can I safely withdraw? The calculator also works out the largest starting monthly withdrawal that lasts the full number of years you enter, with the same yearly increases.
The yearly increase field is what makes this realistic. A ₹50,000 monthly withdrawal that never changes will buy much less in 15 years. Raising it each year in line with inflation keeps your lifestyle steady, but it also drains the corpus faster.
How it works
Each month, the withdrawal is taken out first and the remaining balance grows at the monthly equivalent of your yearly return. Once a year, the withdrawal amount rises by the percentage you enter. The calculator repeats this until either the planning period ends or the balance reaches zero.
Worked examples
Withdrawals that rise with inflation. Start with ₹1 crore earning 8% a year, withdraw ₹50,000 a month and increase it by 6% every year. The corpus lasts 20 years and 8 months, paying out about ₹2.32 crore in total before it runs out.
Making it last 35 years. Keep the same ₹1 crore, 8% return and 6% yearly increase, but aim for 35 years. The most you can start with is about ₹33,285 a month.
Withdrawals that never rise. Take a flat ₹50,000 a month for 30 years from the same ₹1 crore at 8%, and the corpus doesn't run out at all. In fact, about ₹2.97 crore remains. That looks reassuring, but by year 30 that ₹50,000 would buy only a fraction of what it buys today.
The gap between the first and third examples is the most important lesson on this page. Ignoring inflation makes almost any withdrawal look sustainable. Including it shows what your corpus can really support.
Why the early years matter most
This calculator assumes a steady return every year. Real markets don't work like that. If markets fall sharply in the first few years of retirement while you are withdrawing, you sell more units at low prices, and that money is gone before markets recover. This is often called sequence of returns risk. Two retirees with the same average return can end up in very different places depending on when the bad years fall.
Common ways people manage this include keeping a few years of expenses in steadier investments, being flexible with withdrawals in bad years, and starting with a lower withdrawal than the maximum the calculator shows.
Using the result in your FIRE plan
The "most you can withdraw" figure is a quick check on your FIRE number. If the maximum for your planning period is below what you expect to spend each month, you either need a larger corpus, a lower budget, or a later retirement date. The FIRE number calculator works this out in reverse, starting from your expenses, and adds healthcare and one-time goals separately.
What this calculator leaves out
- Tax. Each SWP payment is partly your own capital and partly gains, and capital gains tax may apply to the gains portion.
- Exit loads. Withdrawals within a fund's exit load period may carry a charge.
- Return variation. As explained above, real returns are uneven.
Treat the results as a planning guide. For a withdrawal strategy built around your tax situation, speak to a SEBI-registered investment adviser.