What is the SWP formula? How is SWP calculated?

SWP is calculated month by month: Closing Balance = Opening Balance + (Opening Balance × Monthly Rate) − Monthly Withdrawal. Monthly Rate = Annual Return ÷ 12. Example: ₹50 lakh corpus at 12% annual return, ₹40,000/month withdrawal — Month 1 interest = ₹50,000; Closing Balance = ₹50,50,000 − ₹40,000 = ₹50,10,000. This repeats each month until the corpus depletes or the time period ends.

What is the difference between SWP and SIP?

SIP (Systematic Investment Plan) is for the wealth accumulation phase — you invest a fixed amount every month to build a corpus. SWP (Systematic Withdrawal Plan) is for the distribution phase — you withdraw a fixed amount every month from an existing corpus. Most investors use SIP during their working years to build wealth and switch to SWP at retirement to generate income.

Is SWP better than FD for retirement income?

Yes, SWP from equity mutual funds is generally more tax-efficient than FD interest. FD interest is fully taxable at your income slab (up to 30%) and TDS is deducted at source. In SWP, only the capital gains portion of each withdrawal is taxed — and equity LTCG up to ₹1.25L/year is tax-free. However, FDs offer guaranteed returns while SWP returns depend on market performance.

How is SWP taxed in India?

For equity mutual funds held over 12 months: LTCG at 12.5% on gains above ₹1.25 lakh/year (gains below this are tax-free). Units held under 12 months: STCG at 20%. No TDS is deducted on SWP withdrawals. For debt funds purchased after April 2023, all gains are taxed at your income slab rate regardless of holding period.

Can I change my SWP withdrawal amount?

Yes — you can increase, decrease, pause, or stop your SWP at any time without penalties. Most mutual fund AMCs allow this online through their website, app, or platforms like MF Central, Zerodha Coin, or Groww. Changes typically take effect from the next withdrawal date.

What return rate should I use in the SWP calculator?

Use conservative estimates: 8–10% for equity mutual funds, 6–7% for balanced or hybrid funds, and 5–6% for debt funds. For retirement planning with a 20+ year horizon, use 8% for equity to account for bad years. Overestimating returns is the most common mistake in SWP planning — it leads to early corpus depletion.

What happens when my corpus runs out?

When your corpus reaches zero, the mutual fund automatically stops the SWP — no further withdrawals are made. Our calculator shows exactly when this happens so you can adjust your withdrawal amount or increase your initial investment before it's too late.

How is SWP different from the dividend option in mutual funds?

SWP gives you full control — you set the amount and frequency. Dividends are declared by the fund house at their discretion, are irregular, and depend on the fund's distributable surplus. Since the 2020 dividend taxation change, dividends are taxed as per your income slab, making SWP from equity funds more tax-efficient than the dividend option.

How is SWP taxed compared to salary or pension?

SWP is taxed more favorably than salary or pension. Salary and pension are taxed at your income slab rate (up to 30%). For equity SWP held over 12 months, only gains above ₹1.25L/year are taxed at 12.5% (LTCG). For a retired investor with no other income, SWP from equity funds is likely the most tax-efficient income source available.

Should I choose SWP or STP?

Use SWP to generate monthly income from your corpus — money comes to your bank account. Use STP (Systematic Transfer Plan) to move money between two mutual fund schemes, such as shifting from a debt fund to an equity fund gradually. SWP is for income generation; STP is for asset allocation rebalancing. They serve different purposes and can be used simultaneously.

Free Tool

Systematic Withdrawal Plan Calculator

India's free SWP calculator — find out exactly how long your mutual fund corpus will last with monthly withdrawals. Instant results: corpus duration, total withdrawals, interest earned, and month-by-month breakdown.

Enter Your Details

Total Investment Amount (₹)

₹

Monthly Withdrawal Amount (₹)

₹

Expected Annual Return Rate (%)

Time Period (Years)

yrs

Sustainable Plan

Your corpus lasts

10 yrs

₹10L remaining after 10 years

Total Amount Withdrawn

₹12,00,000

Total Interest Earned

₹12,00,000

Final Corpus Value

₹10,00,000

Capital Runway

Portfolio Projection

Retirement planning in India, simplified.

From your first NPS contribution to your last SWP withdrawal — expert guides on building, growing, and drawing down a retirement corpus that lasts.

What is SWP (Systematic Withdrawal Plan)?

A Systematic Withdrawal Plan (SWP) is a mutual fund facility that pays you a fixed amount every month from your invested corpus — it is the withdrawal equivalent of a SIP. You invest a lump sum once, then the fund automatically redeems units each month to pay you. The remaining corpus stays invested and continues earning returns. SWP is the most tax-efficient way to generate regular retirement income in India compared to FDs, annuities, or dividend plans.

How Does SWP Work?

Invest a lump sum in a mutual fund scheme (equity, hybrid, or debt)

Set a fixed monthly withdrawal amount and start date

Each month, the fund automatically redeems units equal to your withdrawal amount at prevailing NAV

The remaining corpus stays invested and continues to grow with market returns

You receive the fixed amount directly in your bank account every month until the corpus runs out or you stop the SWP

Key Benefits of SWP in Mutual Funds

Regular Monthly Income

Receive a predictable, fixed income every month — without selling your entire investment or depending on FD interest rates

Lower Tax Than FD

Only the capital gains portion of each withdrawal is taxed. For equity funds held over 1 year, gains up to ₹1.25L/year are tax-free

Rupee Cost Averaging

You redeem fewer units when NAV is high and more when NAV is low — naturally averaging your exit price across market cycles

Full Flexibility

Increase, reduce, pause, or stop your SWP at any time — no lock-in, no exit penalties, no advance notice required

Corpus Keeps Growing

The uninvested portion continues earning returns. At moderate withdrawal rates (4–6%), returns can partially or fully offset withdrawals

No TDS Deducted

Unlike bank FDs where TDS is deducted at source, there is no TDS on SWP withdrawals from mutual funds

Why SWP is Better Than Lumpsum Withdrawal

Tax savings: A lumpsum withdrawal triggers tax on all gains at once. SWP spreads gains across years, keeping annual gains below the ₹1.25L LTCG exemption threshold

Corpus longevity: Lumpsum depletes your investment immediately. With SWP, the remaining corpus earns returns and can last 2–3x longer

Emotional discipline: Lumpsum withdrawal tempts impulsive reinvestment or spending. SWP enforces a structured withdrawal habit

Market protection: SWP's unit-based redemption means you automatically withdraw less value during market dips, protecting long-term corpus

Who Should Use This SWP Calculator?

Retirees who want to know how long their mutual fund corpus will last at a given monthly withdrawal

Individuals planning early retirement or financial independence (FIRE) who need to model withdrawal sustainability

Investors looking to replace salary with passive monthly income from their existing investments

Parents planning structured withdrawals from an education fund over 4–5 years

Anyone comparing different withdrawal amounts or return assumptions to find the safest SWP strategy

Step-by-step guide

How to Use This SWP Calculator

Enter your total investment corpus — the lump sum currently in your mutual fund

Set the expected annual return rate (8–10% for equity, 6–7% for hybrid, 5–6% for debt)

Enter your desired monthly withdrawal amount

Set the time period in years you plan to run the SWP

Results update instantly — see how long your corpus lasts, total withdrawals, interest earned, and a full month-by-month breakdown

SWP Taxation in India (2025–26)

Equity Mutual Funds

Units held over 12 months: LTCG at 12.5% on gains exceeding ₹1.25 lakh per year (gains below ₹1.25L are tax-free). Units held under 12 months: STCG at 20%. No TDS is deducted at source.

Debt & Hybrid Mutual Funds

For debt funds purchased after April 2023: all gains (regardless of holding period) are taxed as per your income tax slab. No indexation benefit available. Hybrid funds with <65% equity are treated as debt for tax purposes.

SWP Planning Tips from Financial Experts

Keep 2–3 years of expenses in liquid funds

Before starting SWP, park 2–3 years of monthly expenses in a liquid or ultra-short fund. This buffer prevents you from redeeming equity units during a market downturn

Stay within the 4–6% annual withdrawal rate

Withdrawing 4–6% of your corpus per year is considered sustainable. Above 6–7%, corpus depletion risk rises sharply — especially in equity-heavy portfolios during bear markets

Review your SWP once a year

If your fund has delivered strong returns, you can increase the withdrawal amount. If markets are down, consider temporarily reducing withdrawals to protect the corpus

Split corpus across 2–3 fund categories

Keep 50–60% in equity for growth, 30–40% in debt or hybrid for stability. Run separate SWPs from each — draw from debt first in bad years to let equity recover

Increase withdrawal by 5–7% each year for inflation

₹50,000/month today will buy less in 10 years. Plan to increase your SWP amount annually by roughly the inflation rate (5–7%) to maintain your real purchasing power

Frequently Asked Questions about SWP

The ideal SWP withdrawal rate is 4–6% of your corpus per year. For a ₹1 crore corpus, this means ₹40,000–50,000/month. At this rate, with 8–10% annual returns, your corpus can sustain withdrawals for 20–30 years. Withdrawing above 7% annually significantly increases the risk of depleting your corpus early.

Disclaimer: These tools provide estimates based on the inputs provided. Results are for educational purposes only and should not be considered financial advice. Please consult a qualified financial advisor for personalized guidance.