A systematic withdrawal plan: a fixed amount is taken out of a mutual fund investment every month by selling units, and the rest stays invested.

Is the monthly withdrawal taxed as income?

No. Each withdrawal is a sale of units, so only the gain in it is taxed, as capital gains, with the 12-month rule for equity-oriented schemes.

Can the corpus grow during an SWP?

Yes, when the yearly withdrawals are a smaller share of the corpus than the return, as in the example: ₹3,60,000 a year from ₹50 lakh is 7.2%, below a return of 8%.

What happens in a bad year?

The balance falls faster than the plan shows, because units are sold at lower prices. The calculator assumes the same return every month, so leave room for bad years.

They are used at different stages: a SIP builds up an investment and an SWP draws it down. The SIP vs SWP explainer on this site compares them.

SWP Calculator: Monthly Withdrawals, Balance and How Long It Lasts

Type the amount invested, the monthly withdrawal, an expected return and the years. See how much comes out, what is left, and whether the money runs out.

How to use it

Type the amount you have invested, for example ₹50,00,000.
Type how much you want to take out every month.
Type the yearly return you want to test on the money that stays invested, and the number of years.
If you like, type a yearly increase in the withdrawal, for example 5%, to keep up with rising prices.

You see the total taken out, what is left at the end, whether the money lasts the whole period or the month it runs out, and the balance after every year.

What an SWP is

A systematic withdrawal plan (SWP) is the opposite of a SIP. Instead of putting a fixed amount into a mutual fund scheme every month, you take a fixed amount out: the fund house sells enough units each month to pay it into your bank account, and the rest stays invested. People use it to turn a lump of savings, such as a retirement corpus, into a monthly income. You choose the amount and the date, and you can usually change or stop it.

The arithmetic

Each month the balance first grows by one month’s return, the yearly return ÷ 12, and then the withdrawal comes out. For a fixed withdrawal W from a corpus C, after n months:

Balance = C × (1 + i)^n − W × [((1 + i)^n − 1) ÷ i], with i = the yearly return ÷ 1,200.

If the balance falls below a month’s withdrawal, the last withdrawal is whatever is left, and the calculator tells you the month.

Worked example

₹50,00,000 invested, ₹30,000 taken out every month, for 20 years, at 8% a year if that held every year. After the first year the balance is ₹50,41,500, a little more than at the start. After 20 years you have taken out ₹72,00,000, and ₹69,63,401 is still invested.

The balance grows because the withdrawals, ₹3,60,000 a year, are 7.2% of the starting amount, while the return is 8% a year. When the return covers the withdrawals, the corpus can grow. When it does not, the corpus shrinks.

When the money runs out

Change the example to ₹10,00,000 and ₹10,000 a month at 8%. Now the withdrawals are 12% of the corpus a year, more than the return, so the balance shrinks faster every year. The money lasts 13 years and 10 months: it runs out in month 10 of year 14, after paying out ₹16,53,413 in all. The calculator says so above the chart and shows a balance of ₹0.

Raising the withdrawal every year

A fixed ₹30,000 buys less every year as prices rise. The Raise the withdrawal every year box increases it once every 12 months. With a 5% rise, ₹30,000 becomes ₹31,500 in year 2 and ₹72,199 a month in year 19, and the same ₹50,00,000 at 8% runs out in month 11 of year 19, after paying out ₹1,08,51,985. Keeping up with prices makes a corpus run out sooner.

Tax on an SWP

Each withdrawal is a sale of units, so it is taxed as capital gains, not as income, and only the gain in each sale is taxed: the difference between what those units were bought for and what they were sold for. For equity-oriented schemes, units held more than 12 months pay 12.5% on long-term gains above ₹1.25 lakh a year, and units held for less pay 20% on the gain. Units of debt funds bought on or after 1 April 2023 are taxed at your slab rate. Ask a chartered accountant about your own case.

What the calculator leaves out

It uses the same return every month. Real returns go up and down, and a fall early in the plan does more damage than the same fall later, because the withdrawals keep selling units at the lower prices. Exit loads, tax and the expense ratio (already inside a scheme’s published returns) are not included.

Questions people ask

What is an SWP?: A systematic withdrawal plan: a fixed amount is taken out of a mutual fund investment every month by selling units, and the rest stays invested.
Is the monthly withdrawal taxed as income?: No. Each withdrawal is a sale of units, so only the gain in it is taxed, as capital gains, with the 12-month rule for equity-oriented schemes.
Can the corpus grow during an SWP?: Yes, when the yearly withdrawals are a smaller share of the corpus than the return, as in the example: ₹3,60,000 a year from ₹50 lakh is 7.2%, below a return of 8%.
What happens in a bad year?: The balance falls faster than the plan shows, because units are sold at lower prices. The calculator assumes the same return every month, so leave room for bad years.
SIP or SWP?: They are used at different stages: a SIP builds up an investment and an SWP draws it down. The SIP vs SWP explainer on this site compares them.

SWP calculator