SWP Calculator

SWP Calculator: Turn a Corpus Into a Monthly Income

A Systematic Withdrawal Plan (SWP) is a facility offered by mutual funds that lets you withdraw a fixed amount from your investment at regular intervals, usually every month. It is the mirror image of a SIP: instead of putting money in bit by bit, you take money out bit by bit while the balance stays invested and continues to earn returns. This SWP Calculator estimates the two things that matter most to anyone living off their savings: how much corpus remains after a chosen period, and how long your money will last at a given withdrawal amount.

Who is it for?

• Retirees who want a predictable monthly income from a lump sum (PF, gratuity, sale of property).
• People building a bridge income between jobs, sabbaticals, or setting up a business.
• Investors who prefer a tax-efficient alternative to bank interest or an annuity.

The exact formula in words

SWP maths is the standard reducing-balance annuity calculation. Each period the corpus first grows by the periodic rate of return, and then the withdrawal is taken out. The remaining balance after a number of withdrawals is:

Remaining corpus = P × (1 + r) raised to the power n, minus W × [ ((1 + r) raised to the power n, minus 1) divided by r ]

Here P is the starting corpus, W is the fixed withdrawal per period, r is the periodic rate of return (annual rate divided by 12 for monthly withdrawals), and n is the number of withdrawals. To find how long the money lasts, the calculator increases n until the remaining corpus falls to zero.

A fully worked example

Suppose you retire with a corpus of Rs. 50,00,000 (Rs. 50 lakh), invest it in a fund you expect to earn 10% per year, and withdraw Rs. 35,000 every month for 10 years.

• Step 1 - periodic rate: r = 10% / 12 = 0.8333% per month = 0.008333.
• Step 2 - number of periods: n = 10 years × 12 = 120 months.
• Step 3 - growth factor: (1 + 0.008333) raised to the power 120 = about 2.7070.
• Step 4 - grown corpus: 50,00,000 × 2.7070 = about Rs. 1,35,35,000.
• Step 5 - value of withdrawals: 35,000 × [ (2.7070 − 1) / 0.008333 ] = 35,000 × 204.84 = about Rs. 71,69,400.
• Step 6 - remaining corpus: 1,35,35,000 − 71,69,400 = about Rs. 63,65,600 (roughly Rs. 63.65 lakh).

Notice what happened: you withdrew Rs. 42 lakh over 10 years (35,000 × 120) and your corpus still grew to about Rs. 63.65 lakh, because your 10% return outpaced your withdrawal rate of 8.4% a year. Raise the withdrawal to, say, Rs. 60,000 a month and the corpus would shrink instead, and the calculator would show the year in which it runs out.

Rules and edge cases

• SWP is available on most open-ended mutual fund schemes; you set the amount, date, and frequency, and units are redeemed automatically to fund each payout.
• The return you enter is an assumption, not a guarantee. Real fund returns fluctuate, so the actual corpus path will differ from the smooth curve shown here.
• Sequence-of-returns risk: a run of poor returns in the early years does far more damage than the same losses later, because withdrawals are eating into a falling balance.
• If your withdrawal rate is higher than your return, depletion is only a matter of time - the calculator tells you when.

Tax treatment (FY 2025-26)

Each SWP payout is treated as a redemption, so tax applies only to the capital-gains portion of that withdrawal, not the whole amount - a big advantage over fully-taxable bank or FD interest. As of FY 2025-26, for equity-oriented funds, long-term gains on units held over 12 months (LTCG) are taxed at 12.5% beyond a combined annual exemption of Rs. 1.25 lakh, while units held 12 months or less (STCG) are taxed at 20%. For debt funds purchased on or after 1 April 2023, gains are added to your income and taxed at your slab rate regardless of holding period. Rates and thresholds can change in the annual Budget, so confirm the current position before filing.

Common mistakes and tips

• Ignoring inflation: a fixed Rs. 35,000 buys less each year. Consider a step-up SWP that raises the withdrawal annually.
• Over-withdrawing: a sustainable rate is usually 4%-6% of corpus a year; going higher risks running dry.
• Starting SWP too soon after investing in equity: units redeemed within 12 months attract the higher STCG rate.
• Confusing SWP with dividend/IDCW payouts - an SWP gives you control over the exact amount and is generally more tax-efficient.
• Keep 1-2 years of withdrawals in a low-risk fund to ride out market dips without selling equity at a loss.