Complete guide
Reviewed July 2026A Systematic Withdrawal Plan (SWP) is the reverse of a SIP: instead of investing a fixed amount each month, you withdraw one, while the rest of your corpus stays invested and keeps growing. It's how many retirees turn a lump sum into a steady, self-managed monthly paycheque - with more flexibility and better tax treatment than a traditional annuity.
This calculator shows how long your corpus lasts (or how much remains) given your starting amount, monthly withdrawal, expected return and time horizon. Below you'll find the mechanics, the crucial relationship between withdrawal rate and return, worked examples, the tax advantage over dividends, and the mistakes that drain a corpus too fast.
The central tension of any SWP is simple: withdraw less than your corpus earns and it can last forever; withdraw more and it slowly depletes. Getting that balance right is the whole game.
How an SWP works
Each period, the fund redeems just enough units to pay your withdrawal, and the remaining units continue to grow at the fund's return. Whether your corpus shrinks, holds or grows depends on the tug-of-war between two forces: the return pulling it up and your withdrawals pulling it down.
The mechanics
Each month: balance = balance x (1 + monthly return) - withdrawal monthly return = annual return / 12 Sustainable if: annual withdrawal <= corpus x return (e.g. a 6% withdrawal on an 8% return corpus grows)
There's no single closed-form 'how long it lasts' number you'd compute by hand easily - it's a month-by-month simulation, which the calculator runs. But the rule of thumb is clear: if your yearly withdrawal is less than what the corpus earns, the balance grows; if it's more, the balance declines and eventually runs out.
Worked examples
- Corpus Rs 50 lakh, withdraw Rs 25,000/month, 8% return: annual withdrawal Rs 3 lakh = 6% of corpus, below the 8% earned - so the corpus grows over time while paying you.
- Same corpus, withdraw Rs 40,000/month (Rs 4.8 lakh/year = 9.6%): above the 8% return, so the corpus slowly depletes and lasts roughly 18-20 years.
- Withdraw Rs 60,000/month (14.4%): the corpus drains fast, lasting under 10 years - a common over-withdrawal trap.
- Rule of thumb: a 4-6% annual withdrawal rate is widely considered sustainable for a long retirement.
SWP vs alternatives, and tax
| SWP | Annuity | Dividend/interest | |
|---|---|---|---|
| Income control | You choose the amount | Fixed by insurer | Varies, not guaranteed |
| Corpus access | Full - withdraw or stop anytime | Locked into the annuity | Retained |
| Growth potential | Yes - stays invested | None (fixed payout) | Yes |
| Tax efficiency | High (only the gain portion taxed) | Fully taxable as income | Taxed on payout |
| Flexibility | High | Low | Medium |
Using this calculator
- Enter your corpus, desired monthly withdrawal, expected return and time horizon.
- Read whether the corpus grows, holds or depletes - and the remaining balance.
- Aim for a withdrawal rate (annual withdrawal / corpus) of about 4-6% for a long-lasting income.
- Revisit yearly - markets and inflation change what's sustainable, and you can adjust the withdrawal.
Common mistakes
- Withdrawing more than the corpus earns, draining it faster than expected.
- Ignoring sequence-of-returns risk: big early losses while withdrawing can permanently damage the corpus.
- Using an aggressive return assumption, then over-withdrawing based on it.
- Forgetting inflation - a fixed withdrawal buys less each year, so income needs to rise over time.
- Putting SWP money entirely in volatile equity; a balanced or hybrid fund smooths withdrawals in retirement.
Frequently asked questions
Glossary
- SWP
- Systematic Withdrawal Plan - regular withdrawals from a fund while it stays invested.
- Withdrawal rate
- Annual withdrawal as a percentage of the corpus; 4-6% is often sustainable.
- Corpus
- The invested amount from which withdrawals are taken.
- Sequence-of-returns risk
- The harm from poor early returns while withdrawing.
- Return of capital
- The principal portion of a withdrawal, which isn't taxed.
- Capital gains
- The taxable growth portion of each SWP withdrawal.
- Decumulation
- Drawing down a corpus for income, the opposite of accumulation.
- 4% rule
- A guideline for a ~30-year sustainable withdrawal rate.
Key takeaways
An SWP draws a fixed regular income from an invested corpus, offering more control, growth potential and tax efficiency (only the gain portion is taxed) than an annuity. The corpus lasts - even grows - when your withdrawal rate stays below the return, so aim for a sustainable 4-6% a year. Watch sequence-of-returns risk and inflation, hold a balanced mix rather than all-equity, and review yearly. It's the standard, flexible way to turn a lump sum into a self-managed paycheque.
Enter your corpus, withdrawal and return above to see how long the money lasts; then dial the withdrawal down to a 4-6% rate and watch the corpus last far longer.