What is a Systematic Withdrawal Plan (SWP)?

A Systematic Withdrawal Plan (SWP) is an investment strategy where you withdraw a fixed amount of money regularly from your investment portfolio at predetermined intervals (usually monthly). The remaining corpus continues to grow with investment returns, allowing your money to last longer through retirement or other financial goals.

How does SWP differ from SIP?

SIP (Systematic Investment Plan) involves investing a fixed amount regularly, while SWP (Systematic Withdrawal Plan) involves withdrawing a fixed amount regularly. SIP builds your corpus through regular investments with compounding returns. SWP depletes your corpus through regular withdrawals while the remaining amount continues to earn returns. Think of SIP as accumulation and SWP as decumulation.

What are the benefits of using SWP?

SWP provides several benefits: (1) Disciplined withdrawal schedule ensuring consistent cash flow, (2) Remaining corpus continues to generate returns through compound interest, (3) Flexibility to adjust withdrawal amounts based on needs, (4) Tax-efficient in many cases compared to selling investments randomly, (5) Helps manage inflation through continued investment growth, (6) Reduces emotional decision-making during market volatility.

When should I start an SWP?

You should consider starting an SWP when: (1) You've reached retirement age or a specific financial milestone, (2) You have a substantial corpus and need regular income, (3) You have a long time horizon remaining (5+ years) so your remaining investment can grow, (4) You want to supplement your pension or salary, (5) You're transitioning from accumulation to income generation phase. Generally, SWP works best when you have at least 8-10 years of investment period remaining.

How much should I withdraw monthly using SWP?

A safe withdrawal rate is typically 0.5-1.5% of your total portfolio monthly, which equals 6-18% annually. For example: If you have ₹50 lakhs, monthly withdrawals of ₹5,000-₹7,500 would be considered safe. This conservative approach allows your remaining corpus to grow and sustain withdrawals for 20+ years. However, the optimal withdrawal amount depends on your expected returns, inflation rate, and time horizon. Higher returns can support higher withdrawal rates.

What rate of return should I assume for SWP?

Expected returns depend on your portfolio allocation: (1) Conservative portfolio (bonds/debt): 5-7% annual return, (2) Balanced portfolio (50% equity, 50% debt): 8-10% annual return, (3) Growth portfolio (equity-heavy): 10-12% annual return. Historical market returns suggest equity funds have averaged 10-12% while debt funds average 6-8%. Use conservative estimates rather than optimistic ones to ensure your corpus lasts longer. Consider your risk tolerance and investment horizon when choosing target returns.

Can I increase my SWP amount over time?

Yes, many investors increase SWP amounts over time to adjust for inflation. A common approach is to increase withdrawals by 3-5% annually to maintain purchasing power. However, always monitor your portfolio value and ensure the increased withdrawal rate remains sustainable based on your returns. If returns fall below expectations, you may need to moderate the increase. Some investors prefer step-up SWP where they increase withdrawals at fixed intervals rather than fixed percentages.

What happens if returns fall below my expected return?

If actual returns fall below expectations, your corpus depletes faster than anticipated. To manage this risk: (1) Choose a conservative return estimate that you're likely to achieve, (2) Review your withdrawal amount annually and adjust if needed, (3) Maintain adequate emergency funds separately, (4) Consider starting with smaller withdrawal amounts to build a buffer, (5) Diversify your investments across asset classes to smooth returns, (6) Be prepared to reduce withdrawals during bear markets to preserve your corpus for better times.

SWP Calculator

Withdrawal Results

Enter your details to calculate SWP results

Your corpus continues to earn returns even after withdrawals. The calculation assumes consistent returns and doesn't account for market fluctuations.

Export & Share

SWP Withdrawal Tips

Start with a conservative withdrawal rate of 0.5-1% monthly
Review portfolio returns annually and adjust withdrawals if needed
Maintain emergency reserves separate from SWP corpus
Consider inflation by implementing step-up SWP yearly
Rebalance portfolio annually to maintain target allocation
Track actual vs. expected returns to monitor sustainability

Learn More

Related Calculators

Important Disclaimer

This SWP calculator is for educational purposes only. Results are estimates based on assumptions and don't account for all factors like market volatility, inflation changes, or tax law changes. Actual results may vary significantly. Consult a certified financial advisor before making investment decisions. Past performance does not guarantee future results.

Mastering Systematic Withdrawal Plans (SWP): A Complete Guide

A Systematic Withdrawal Plan (SWP) is an investment strategy where you withdraw a fixed amount regularly from your portfolio. The remaining corpus continues to grow with investment returns, extending how long your money lasts during retirement or other financial goals.

Regular Income Stream

SWP provides disciplined, regular income from your investments, perfect for retirement when you need consistent cash flow without managing individual investment sales.

Continued Growth

Your remaining corpus continues to compound and grow, potentially extending how long your investments will support your withdrawals.

Tax Efficiency

SWP is often more tax-efficient than selling investments randomly. Different asset classes have different tax implications on withdrawals.

Flexibility

You can adjust withdrawal amounts, pause, or modify the plan as your financial needs change, providing flexibility through your financial journey.

SWP vs Lump Sum: Comparison

Factor	SWP (Systematic Withdrawal)	Lump Sum Withdrawal
Cash Flow	Regular, predictable monthly income	One-time lump sum amount
Remaining Corpus Growth	Continues to grow with returns	Stops growing after withdrawal
Longevity	Can last 20-30+ years with proper planning	Depletes faster, depending on usage
Inflation Protection	Can increase withdrawals over time	Purchasing power erodes with inflation
Discipline	Enforces disciplined spending habits	Risk of spending too quickly
Tax Efficiency	Spread withdrawals across years for tax benefits	May result in higher tax bracket in one year
Flexibility	Can adjust withdrawal amounts annually	Fixed amount, no adjustments possible
Market Timing Risk	Reduces impact of market volatility	Vulnerable to market timing risks

Verdict: SWP is generally superior for long-term financial security as it combines regular income with continued growth, making your money last longer while maintaining flexibility.

Safe Withdrawal Rates Guide

One of the most critical aspects of SWP is determining a safe withdrawal rate that allows your corpus to sustain for your expected lifetime.

Time Horizon	Monthly Rate	Annual Rate	Investment Example	Result
20 Years	0.5-0.75%	6-9%	₹50,00,000 @ 10%	Withdraw ₹25,000-₹37,500/month
25 Years	0.4-0.65%	5-8%	₹50,00,000 @ 10%	Withdraw ₹20,000-₹32,500/month
30 Years	0.3-0.5%	4-6%	₹50,00,000 @ 10%	Withdraw ₹15,000-₹25,000/month
35 Years	0.25-0.4%	3-5%	₹50,00,000 @ 10%	Withdraw ₹12,500-₹20,000/month

Note: These rates assume consistent returns. In reality, using a 4% annual withdrawal rate is considered very safe by financial experts for 30+ year horizons. Your withdrawal rate depends on your expected returns and time horizon.

Step-up SWP: Adjusting for Inflation

Regular SWP maintains a fixed withdrawal amount, but inflation erodes its purchasing power. Step-up SWP increases withdrawals periodically (usually annually) to maintain purchasing power.

Regular SWP Example

Initial Corpus: ₹50,00,000

Monthly Withdrawal: ₹50,000 (fixed)

After 10 Years (3% inflation):

Purchasing power = ₹36,963 (73.9% of original)

Loss of purchasing power: ₹13,037/month

Step-up SWP Example

Initial Corpus: ₹50,00,000

Monthly Withdrawal: ₹50,000 (increasing 3% annually)

After 10 Years (3% inflation):

Monthly Withdrawal = ₹67,238 (maintains purchasing power)

Maintains real value of withdrawals

Step-up SWP Projection (₹50 Lakh @ 10% Return, 3% Annual Increase)

Year	Monthly Withdrawal	Annual Withdrawal	Remaining Corpus	Growth
1	₹50,000	₹6,00,000	₹50,92,000	+10%
5	₹57,964	₹6,95,568	₹58,21,477	+10%
10	₹67,238	₹8,06,856	₹72,15,891	+10%
15	₹77,982	₹9,35,784	₹89,82,145	+10%
20	₹90,394	₹10,84,728	₹1,11,53,267	+10%

Key Insight: Step-up SWP requires a return rate higher than your inflation rate to sustain. In this example, 10% returns exceed 3% inflation, allowing the corpus to grow while stepping up withdrawals.

Recommended Portfolio Allocation for SWP

Your portfolio allocation depends on your age, expected returns, and risk tolerance. More stable allocations support consistent withdrawals.

Conservative (Age 60+)

Expected Return: 6-7% annually

Debt Funds: 60-70%
Balanced Funds: 20-30%
Equity Funds: 0-10%

Focus: Capital preservation with steady returns

Moderate (Age 50-60)

Expected Return: 8-9% annually

Debt Funds: 40-50%
Balanced Funds: 30-40%
Equity Funds: 10-20%

Focus: Balance growth with stability

Growth (Age 40-50)

Expected Return: 9-11% annually

Debt Funds: 20-30%
Balanced Funds: 30-40%
Equity Funds: 30-50%

Focus: Higher growth with moderate risk

Aggressive (Age Under 40)

Expected Return: 11-13% annually

Debt Funds: 10-20%
Balanced Funds: 20-30%
Equity Funds: 50-70%

Focus: Maximum growth, can weather volatility

Frequently Asked Questions

Yes, most mutual funds and investment platforms allow you to modify your SWP amount. You can increase, decrease, or pause your SWP based on your needs. Some funds have minimum and maximum limits on withdrawal amounts. You can also start a new SWP with a different amount while keeping the existing one active. However, frequent changes can complicate tax filing, so it's better to make changes thoughtfully and document them.

Tax treatment of SWP depends on the fund type and holding period:

Equity Funds: Long-term capital gains (LTCG) are taxable at 20% with indexation benefit or 10% without indexation (if held over 1 year)
Debt Funds: LTCG taxed at 20% with indexation (held over 3 years), short-term gains as per income slab
Balanced Funds: Combined treatment based on equity/debt composition

The tax liability arises when you sell units (withdraw), not when you earn returns. This tax efficiency is one advantage of SWP over lump sum withdrawals.

This is why careful withdrawal planning is crucial. To avoid running out of money:

Use a conservative withdrawal rate (0.5-1% monthly)
Plan for expected returns to be lower than historical averages
Monitor actual vs. expected returns and adjust annually
Have alternative income sources (pension, salary, rental income)
Maintain emergency reserves separate from your SWP corpus
Be prepared to reduce withdrawals during market downturns
Consider step-up SWP instead of fixed withdrawals

Recommended fund types for SWP:

Balanced/Hybrid Funds: Ideal for most SWP investors - provides both growth and stability
Multi-asset Funds: Diversified across stocks, bonds, gold - good risk management
Equity Funds: For younger investors with 20+ year horizon - higher growth potential
Debt Funds: For conservative investors nearing or in retirement - stable returns
Index Funds: Low-cost alternative with predictable returns

Avoid for SWP: Very volatile funds like small-cap or sector funds are not suitable for regular withdrawals as they may deplete your corpus during market downturns.

Key differences between SWP and dividend options:

Aspect	SWP	Dividend Option
Source	Redemption of units	Dividend earned by fund
Flexibility	Fixed amount, fully flexible	Depends on fund performance
Tax Treatment	Capital gains tax on redemption	Dividend distribution tax (varies)
Corpus Reduction	Reduces units and corpus	Reduces fund value indirectly

SWP is generally preferred for regular income as it provides more control and flexibility.

Corpus Size	Conservative Monthly (0.5%)	Moderate Monthly (0.75%)	Aggressive Monthly (1%)
₹10,00,000	₹5,000	₹7,500	₹10,000
₹25,00,000	₹12,500	₹18,750	₹25,000
₹50,00,000	₹25,000	₹37,500	₹50,000
₹1,00,00,000	₹50,000	₹75,000	₹1,00,000

These are guidelines. Actual withdrawal should depend on expected returns, inflation, and time horizon.

Yes, rebalancing is crucial for SWP portfolio maintenance. Here's why:

Market movements change your portfolio allocation from your target (e.g., stock market rally increases equity %, reducing debt %)
Annual rebalancing helps maintain your target risk level and return expectations
Rebalancing before withdrawals can be more tax-efficient
Portfolio drift could result in either too much or too little risk than intended

Rebalancing strategy: Review annually or when allocation drifts by more than 5% from target. Reduce overweight asset classes and add to underweight ones.

Yes, many investors combine SWP and SIP strategies:

Scenario 1: SWP from mature investments + SIP to new investments for continued growth
Scenario 2: SWP from high-return investments + SIP to diversify into new asset classes
Scenario 3: SWP from bond funds + SIP to equity funds for inflation protection

This approach can help transition from accumulation to income generation phase while maintaining growth potential. For example, retired investors can withdraw from one portion while continuing to build another portion for legacy or future needs.