An SWP is the reverse of a SIP. Instead of putting a fixed amount in every month, you take a fixed amount out. The rest of the money stays invested and keeps growing, so the withdrawals can last a long time. The question is how much you can take without running out.
Flat withdrawals look generous
Put ₹50 lakh in an equity fund at an illustrative 10% a year and take out ₹30,000 a month. Kept at ₹30,000, the withdrawals last all 25 years, with ₹1.72 crore still left at the end.
But a flat ₹30,000 buys less every year. At 6% inflation, ₹30,000 at the end of year 25 buys about what ₹6,990 buys today. If the withdrawals are your living costs, they need to rise with prices.
Withdrawals that keep up with prices
Raise the ₹30,000 by 6% every year, and the money runs out after 20 years 5 months. By then you have taken out ₹1.38 crore.
The most that ₹50 lakh can pay for the full 25 years, rising 6% a year, is ₹26,409 a month to start. That rises to ₹1,06,928 a month by year 25.
- ₹30,000 a month, kept flat
- ₹26,409 a month, rising 6% a year
- ₹30,000 a month, rising 6% a year
Years of withdrawals
See the numbers
| Years of withdrawals | ₹30,000 a month, kept flat | ₹26,409 a month, rising 6% a year | ₹30,000 a month, rising 6% a year |
|---|---|---|---|
| Today | ₹50.00 lakh | ₹50.00 lakh | ₹50.00 lakh |
| Year 1 | ₹51.24 lakh | ₹51.69 lakh | ₹51.24 lakh |
| Year 2 | ₹52.60 lakh | ₹53.35 lakh | ₹52.37 lakh |
| Year 3 | ₹54.10 lakh | ₹54.96 lakh | ₹53.38 lakh |
| Year 4 | ₹55.74 lakh | ₹56.51 lakh | ₹54.24 lakh |
| Year 5 | ₹57.56 lakh | ₹57.98 lakh | ₹54.92 lakh |
| Year 6 | ₹59.55 lakh | ₹59.35 lakh | ₹55.37 lakh |
| Year 7 | ₹61.74 lakh | ₹60.58 lakh | ₹55.57 lakh |
| Year 8 | ₹64.16 lakh | ₹61.66 lakh | ₹55.47 lakh |
| Year 9 | ₹66.81 lakh | ₹62.55 lakh | ₹55.03 lakh |
| Year 10 | ₹69.73 lakh | ₹63.21 lakh | ₹54.17 lakh |
| Year 11 | ₹72.94 lakh | ₹63.60 lakh | ₹52.85 lakh |
| Year 12 | ₹76.47 lakh | ₹63.67 lakh | ₹50.99 lakh |
| Year 13 | ₹80.36 lakh | ₹63.38 lakh | ₹48.52 lakh |
| Year 14 | ₹84.63 lakh | ₹62.65 lakh | ₹45.35 lakh |
| Year 15 | ₹89.33 lakh | ₹61.43 lakh | ₹41.38 lakh |
| Year 16 | ₹94.50 lakh | ₹59.63 lakh | ₹36.50 lakh |
| Year 17 | ₹1.00 crore | ₹57.18 lakh | ₹30.60 lakh |
| Year 18 | ₹1.06 crore | ₹53.99 lakh | ₹23.53 lakh |
| Year 19 | ₹1.13 crore | ₹49.93 lakh | ₹15.14 lakh |
| Year 20 | ₹1.21 crore | ₹44.90 lakh | ₹5.27 lakh |
| Year 21 | ₹1.29 crore | ₹38.77 lakh | ₹0 |
| Year 22 | ₹1.38 crore | ₹31.39 lakh | ₹0 |
| Year 23 | ₹1.48 crore | ₹22.60 lakh | ₹0 |
| Year 24 | ₹1.60 crore | ₹12.21 lakh | ₹0 |
| Year 25 | ₹1.72 crore | ₹1,630 | ₹0 |
₹50 lakh at an illustrative 10% a year before tax, withdrawals at the end of every month. Fund returns are assumed, not promised. Markets can fall.
The return decides a lot
| Fund return a year | Most you can take a month | Rising to, in year 25 |
|---|---|---|
| 7% | ₹19,302 | ₹78,153 |
| 8% | ₹21,543 | ₹87,226 |
| 10% | ₹26,409 | ₹1,06,928 |
| 12% | ₹31,733 | ₹1,28,485 |
Withdrawals at the end of every month, raised 6% each year. Fund returns are assumed, not promised. Markets can fall.
At 7% a year, the starting income falls to ₹19,302 a month. Nobody knows the return you will get, so plan with a cautious one.
The tax is low
Each withdrawal sells units, and only the gain in those units is taxed. Early on, most of each withdrawal is your own money coming back, so the tax is small. Over the 20 years that ₹30,000 rising 6% lasts, the tax on the gains comes to about ₹8.33 lakh, on ₹1.38 crore withdrawn. Long-term gains up to ₹1.25 lakh a year are tax-free.
The risk an average hides
These figures assume the same return every year. Real markets move up and down, and the order matters. A fall in the first few years, while you are also withdrawing, does far more damage than the same fall later. That is why many retirees keep a year or two of withdrawals somewhere safer, and take less than the maximum.
Try it
Your retirement withdrawals
- Lasts
- 20 years 5 months
- Left at the end
- ₹0
- Most you can take a month
- …
You take out ₹1.38 crore in all and pay about ₹8.33 lakh in tax on the gains.
Try your own amount, withdrawal and return in the SWP calculator, which also shows the most you can take for the years you choose.
For education only. Not investment, tax or insurance advice. Examples use the figures stated in the guide; check your own before you act.