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SWP calculator
A systematic withdrawal plan pays you a fixed sum every month from an invested corpus. See whether the corpus survives.
How it works
Each month the balance earns one-twelfth of the annual return, then the withdrawal comes out. If the return earned is larger than the withdrawal, the balance grows; if smaller, it shrinks until it runs out. With ₹50 lakh, ₹30,000 a month and 8% a year, the balance is still about ₹69.6 lakh after 20 years because withdrawals start below what the corpus earns.
A sustainable withdrawal rate
The figure to watch is annual withdrawals as a percentage of the corpus. Above the expected return, the money will eventually finish; well below it, the corpus can also keep pace with inflation. Retirees often start near 4% to 5% a year and raise the amount gradually. Real markets are uneven, and poor returns early in retirement do more damage than the same returns later, so keep a year or two of withdrawals in a safe fund.
Questions
How is an SWP taxed?
Each withdrawal is a redemption of units. Only the gain portion is taxed, as capital gains, which is often gentler than interest income taxed fully at your slab rate.
SWP or a dividend option?
An SWP gives you control of the amount and timing. Payouts under the income-distribution option depend on the fund and are taxed at your slab rate.