Plan a monthly income from your mutual fund corpus — set an annual step-up so withdrawals keep pace with inflation, and see exactly how long the money lasts.
What is an SWP?
A Systematic Withdrawal Plan is the mirror image of a SIP: instead of investing a fixed amount every month, you redeem a fixed amount from a mutual fund every month. The rest of the corpus stays invested and keeps compounding. It is the standard way Indian retirees convert a lumpsum — retirement savings, EPF withdrawal, a property sale — into a monthly income without surrendering the capital to an insurer.
Each month: balance = balance × (1 + r/12) − withdrawal
Every 12 months: withdrawal = withdrawal × (1 + step-up%)
Why retirees use SWP instead of living on FD interest
FD interest is fixed, fully taxable at your slab rate, and the principal never grows. With an SWP you choose the payout, the corpus can keep growing when withdrawals stay below returns, and tax applies only to the gain portion of each redemption. The honest trade-off: returns are market-linked. A common middle path is keeping 2–3 years of expenses in FDs and running the SWP on the rest.
The inflation point — why the step-up field exists
₹30,000 a month covers today's expenses; at 6% inflation you will need about ₹53,725 a month for the same lifestyle in 10 years. A flat-withdrawal SWP quietly cuts your real income every year. Setting the annual step-up to 5–6% keeps the income honest — and shows you the true, shorter life of the corpus, which is exactly what you want to know before retiring.
How is an SWP taxed? (as of FY 2025-26)
Every withdrawal is a redemption, and only the gain portion of the redeemed units is taxed. For equity funds: units held longer than 12 months attract 12.5% LTCG above the ₹1.25 lakh annual exemption; units held 12 months or less attract 20% STCG. For debt funds bought after 1 April 2023, gains are taxed at your slab rate. Because early instalments are mostly your own capital coming back, a ₹30,000 SWP typically bears far less tax than ₹30,000 of FD interest. Rules can change with each Budget — verify before filing.
Worked example: ₹50 lakh, 9%, ₹30,000 a month
With a flat ₹30,000 withdrawal for 20 years you take out ₹72,00,000 in total, and the corpus ends at ₹1,00,09,152 (₹1.00 crore) — annual withdrawals of ₹3.6 lakh (7.2%) stay below the assumed 9% return, so the balance keeps growing. Switch on a 5% annual step-up and total withdrawals rise to ₹1,19,03,743, with the corpus ending at ₹13,01,222. The step-up is the difference between a paper plan and a real one.
Frequently Asked Questions
How long will ₹1 crore last with a ₹60,000 monthly SWP?
At an assumed 9% return with the withdrawal stepped up 5% a year, the corpus runs out after about 21 years 6 months. The answer is very sensitive to the return you assume and the step-up — change the inputs above and the year-wise table recomputes instantly.
What does "SWP calculator with inflation" mean?
A plain SWP calculator assumes you withdraw the same amount forever. But ₹30,000 a month will not buy in 2036 what it buys today. The annual step-up field raises your withdrawal every year (5–6% roughly tracks Indian consumer inflation), which is the realistic way to plan retirement income — and it materially shortens how long the corpus lasts.
SWP vs FD interest — which is better for monthly income?
An FD pays a fixed, fully taxable interest at your slab rate, and the principal never grows. An SWP keeps the corpus invested (it can keep compounding), lets you choose and step up the payout, and is taxed as capital gains — usually gentler than slab rates. The trade-off: mutual fund returns are market-linked, not guaranteed. Many retirees split between both. Compare with our
FD calculator.
SWP vs annuity — what is the difference?
An annuity (from an insurer, or the mandatory 40% in NPS) pays a guaranteed income for life but the rate locks in at purchase and the capital is typically gone. An SWP has no guarantee — the corpus can deplete — but stays flexible, inheritable and tax-efficient. A common approach is covering essential expenses with guaranteed income and lifestyle expenses with an SWP.
SWP vs IDCW (dividend) plan — which should I pick for income?
IDCW payouts depend entirely on what the fund declares — you control neither the amount nor the timing, and the entire payout is taxed at your slab rate. An SWP from a growth plan gives you a fixed, chosen amount, and only the gain portion of each withdrawal is taxed, as capital gains. For planned monthly income, SWP is the standard recommendation.
Why do SWP calculators on SBI, Groww or AMC sites show different results?
Timing conventions. Tools differ on whether the month's growth is applied before or after the withdrawal, and how the annual return converts to monthly. This calculator grows the balance at r/12 first, then deducts the withdrawal at month-end. Differences between honest tools are small — a large gap usually means a different return or step-up assumption.
How is an SWP taxed?
Each withdrawal is a redemption, so only the gain portion is taxed (as of FY 2025-26): equity funds — units held over 12 months pay 12.5% LTCG above the ₹1.25 lakh annual exemption, units held 12 months or less pay 20% STCG; debt funds bought after 1 April 2023 are taxed at your slab rate. Early SWP instalments are mostly your own capital, so the effective tax is far lower than FD interest of the same amount.
Estimates are for information and education only — not financial, tax or investment advice. Verify current rates and rules with official sources.