SWP explained: how long will ₹50 lakh really last?
₹30,000 a month from ₹50 lakh can last for good, and ₹45,000 runs dry in 17 years. The gap between those two is one number most SWP brochures never show you.
Calci Editorial · · 6 min read
Two people retire with ₹50 lakh each, in the same fund, earning the same 8% a year.
One takes ₹30,000 a month. Twenty years later she has ₹69.6 lakh — more than she started with.
The other takes ₹45,000. His money is gone in seventeen years.
The difference is ₹15,000 a month. The outcome is the difference between a pension and a countdown, and it comes down to a single ratio.
What an SWP actually does
A systematic withdrawal plan is a SIP running backwards. Instead of buying units every month, the fund sells enough of your units to pay you a fixed amount on a fixed date. Whatever is not sold stays invested and keeps earning.
That second half is the entire point. Money in a savings account shrinks by exactly what you take out. Money in an SWP shrinks by what you take out minus what the rest earned that month. When the earnings are big enough, it does not shrink at all.
The SWP calculator runs this month by month. Everything below comes from it, on ₹50 lakh at an assumed 8%.
The only number that matters
Divide what you withdraw in a year by the corpus. Compare that with the return.
| Monthly withdrawal | A year, as % of ₹50 lakh | Left after 20 years | Lasts |
|---|---|---|---|
| ₹25,000 | 6.0% | ₹99,08,503 | Beyond 60 years |
| ₹30,000 | 7.2% | ₹69,63,401 | Beyond 60 years |
| ₹33,333 | 8.0% | ₹50,00,196 | Beyond 60 years |
| ₹35,000 | 8.4% | ₹40,18,299 | 38 years 3 months |
| ₹40,000 | 9.6% | ₹10,73,197 | 22 years 6 months |
| ₹45,000 | 10.8% | Ran out | 17 years |
| ₹50,000 | 12.0% | Ran out | 13 years 10 months |
| ₹60,000 | 14.4% | Ran out | 10 years 3 months |
Look at the ₹33,333 row. It takes out exactly 8% a year, the fund puts back 8%, and after twenty years the balance is still ₹50 lakh. That row is the line.
Below it, the corpus grows while it pays you. Above it, it shrinks, and the shrinking accelerates — because every rupee withdrawn is a rupee that stops earning.
Going from ₹35,000 to ₹40,000 does not cost you 5,000 rupees' worth of time. It costs almost sixteen years.
If you want the money to run out on schedule rather than never, there is a level payout for that too: ₹41,822 a month empties ₹50 lakh in exactly 20 years at 8%, and ₹36,688 a month does it in 30.
Inflation turns a safe plan into a short one
The table above assumes you take the same ₹30,000 in year twenty that you took in year one. Nobody lives like that. Prices rise, so withdrawals rise.
| ₹30,000 a month, raised every year by | Lasts |
|---|---|
| 0% | Beyond 60 years |
| 3% | 24 years 8 months |
| 5% | 18 years 11 months |
| 7% | 15 years 10 months |
| 10% | 13 years 2 months |
This is the table that should worry people.
The "safe" ₹30,000 plan, adjusted for 5% inflation, lasts about as long as a flat ₹45,000 plan. The step-up compounds against you exactly the way returns compound for you.
So the honest question is not "how much can I take?" It is "how much can I take and keep raising?" For most retirement money, that number is well below the return.
The return you assume is doing most of the work
Every figure so far rests on 8%. Here is ₹35,000 a month under different assumptions:
| Return | Left after 20 years | Lasts |
|---|---|---|
| 6% | ₹3,79,591 | 21 years |
| 7% | ₹19,61,261 | 25 years 9 months |
| 8% | ₹40,18,299 | 38 years 3 months |
| 10% | ₹1,00,62,459 | Beyond 60 years |
| 12% | ₹1,98,38,830 | Beyond 60 years |
One percentage point, from 7% to 8%, is worth more than twelve years of income.
That is why an SWP projection built on 12% is almost meaningless. Money you are living on usually sits in something calmer than a pure equity fund — a hybrid or debt fund — and calmer means lower expected returns. Run your numbers at a return you would be embarrassed to miss, not one you hope for.
When the bad year arrives matters more than whether it arrives
Here is the part smooth projections cannot show.
Take twenty years of returns: nineteen years at 10% and one crash year of −20%. Same twenty returns, same average. The only question is when the crash happens.
| Withdrawal | Crash in year 1 | Crash in year 20 | Smooth 8.26% every year |
|---|---|---|---|
| ₹30,000 | ₹32,24,985 left | ₹87,40,466 left | ₹68,69,537 left |
| ₹35,000 | Runs out at 19 years 4 months | ₹61,19,938 left | ₹39,37,187 left |
Identical returns. A difference of ₹55 lakh.
When you are adding money, a crash early on is a sale. When you are withdrawing, a crash early on forces you to sell more units at low prices to raise the same ₹30,000, and those units are not there when the recovery comes.
This is sequence risk, and it is the strongest argument for keeping the first couple of years of withdrawals somewhere that does not fall with the market. Many people do that with a liquid or short-duration debt fund feeding the monthly payout, so the equity portion is never sold in a panic. It is not free — that money earns less — but it buys time.
How SWP withdrawals are taxed
Only the gain inside each withdrawal is taxed, not the whole amount.
If you bought units at a NAV of ₹100 and they are redeemed at ₹125, then ₹6,000 of a ₹30,000 withdrawal is gain and ₹24,000 is simply your own money coming back.
- Equity-oriented funds: units held more than twelve months — long-term gains, taxed at 12.5% on gains above ₹1.25 lakh in a financial year. Held twelve months or less — 20%.
- Debt funds bought on or after 1 April 2023: gains taxed at your slab rate, however long you hold.
Units are redeemed first in, first out. So an SWP started straight after a lump-sum investment sells year-old-or-younger units for its first twelve months, and those gains are short term.
Compare that with the obvious alternative. ₹50 lakh in a fixed deposit at 7% pays ₹29,167 a month of interest — and every rupee of it is taxed at your slab rate, because interest is all income. The SWP's taxable slice is much thinner, especially early on.
That does not make an SWP better. An FD's income is fixed and its capital does not fall in a bad year. An SWP's does. They suit different money.
Setting one up without fooling yourself
A few things that make the difference between a plan and a hope:
- Start with the withdrawal rate, not the monthly figure. Keep the yearly withdrawal comfortably under the return you realistically expect.
- Model the step-up. If you will need 5% more every year, put 5% into the calculator now and see how many years it really buys.
- Test a lower return. If the plan only works at 10%, it does not work.
- Protect the first years. A buffer for early withdrawals blunts the worst of sequence risk.
- Review every year. A good year is a chance to leave more invested, not a reason to raise the payout.
Where these numbers come from
The arithmetic in this post is fixed, but two of its inputs are not: the return your fund actually delivers, and the tax treatment of each withdrawal.
The Securities and Exchange Board of India's investor portal sets out how mutual fund withdrawals work and what a systematic withdrawal plan is in regulatory terms, rather than in a fund house's marketing language. AMFI publishes scheme-level data and the industry's own investor material, including the historical category returns worth testing a withdrawal rate against.
Neither will tell you what your fund will return next year. That is the point of running the same plan at a lower rate before you commit to it.
The SWP calculator shows how long any corpus lasts at your withdrawal, return and yearly increase, with the balance year by year. If you are still building the corpus, the SIP calculator works out what monthly investment gets you there, and the lumpsum calculator does the same for money invested at once. The FD calculator gives the fixed-deposit side of the comparison.