What is a Systematic Withdrawal Plan (SWP)?
A Systematic Withdrawal Plan (SWP) is a facility offered by mutual funds that allows you to withdraw a fixed amount from your investment at regular intervals — typically monthly or quarterly. Unlike the dividend option where payouts depend on the fund’s distributable surplus, an SWP gives you predictable cash flows by redeeming specific units of your mutual fund each period.
SWPs are widely used by retirees in India to create a pension-like income stream from their corpus. The remaining invested amount continues to earn returns, which can extend the life of your corpus significantly. However, if the withdrawal rate consistently exceeds the return rate, your corpus will eventually deplete.
How this SWP calculator helps you
Calculating the longevity of a corpus with regular withdrawals and compounding returns manually can be complex. This calculator helps in the following ways:
Factors that affect your SWP
A successful systematic withdrawal strategy depends on balancing several dynamic factors:
Withdrawal Rate
A higher monthly withdrawal drains your corpus faster. The commonly recommended safe withdrawal rate in India is 4–6% of your initial corpus per year to prevent premature depletion.
Rate of Return
Higher expected returns help your corpus last longer. However, use realistic assumptions (e.g. 10–12% for equity-oriented portfolios, 6–8% for debt portfolios) to build a safe plan.