SWP Calculator: Monthly Pension from Your Corpus

It depends on how long it has to last. With the withdrawal rising 6% a year and the balance earning 10%, the highest first-year withdrawal that lasts:

• 20 years: about 7.5% of the corpus
• 25 years: about 6.6%
• 30 years: about 6.0%
• 40 years: about 5.2%

Divide by 12 for the monthly figure: 6% a year is 0.5% of the corpus a month. At an 8% return, each rate is about 1.3 points lower.

Mostly it depends on the starting withdrawal rate. With withdrawals rising 6% a year and a 10% return:

• 4% a year: doesn’t run out
• 5%: about 45 years
• 6%: about 29½ years
• 7%: about 22½ years
• 8%: about 18 years

A lower return cuts every one of these: at 8%, a 6% withdrawal lasts about 21 years instead of 29½.

An SWP lets you withdraw a fixed (or gradually increasing) amount from your investment corpus at regular intervals, typically monthly, while the remaining balance stays invested and keeps earning returns — commonly used to generate a regular income in retirement.

The "Inflation Rate / Step-Up" input increases your monthly withdrawal every year by that percentage, so your withdrawals keep pace with rising living costs instead of losing purchasing power over a long retirement.

If the balance is exhausted before your chosen time horizon, the calculator flags it as depleted and shows how many months it lasted. Withdrawals are capped at whatever balance remains, so the corpus never goes negative.

Withdrawal rate is your first year's annual withdrawal as a percentage of the starting corpus. A lower withdrawal rate makes the corpus more likely to outlast your time horizon; a higher one increases the risk of depleting it early.

No. It assumes a constant annual return and a constant inflation step-up for the entire horizon, which real markets and expenses never deliver exactly. Treat the result as a planning estimate, not a guarantee.

Each has trade-offs. A fixed deposit or annuity gives predictable payments but little growth, and the interest may be taxed in full every year. An SWP from a mutual fund keeps the balance invested, so it can grow and keep up with inflation, and each withdrawal is partly your own capital coming back — but the balance rises and falls with markets. Many retirees combine both.

It depends on the horizon. For a long retirement, many investors use a hybrid or balanced fund, or keep a few years of withdrawals in a debt fund and the rest in equity to be tapped later. Money you'll withdraw in the next few years shouldn't sit in volatile assets. The 2 Bucket and 3 Bucket Strategy calculators model this approach.

Each withdrawal is treated as selling units, so only the gain portion of it is taxed, not the whole amount — usually as capital gains, at a rate that depends on the fund type, how long you held the units and your country's rules. This is one reason an SWP can be more tax-efficient than interest income. The calculator shows pre-tax figures, so check the current rules or ask a tax adviser.

Early losses do the most damage, because withdrawals then sell more units at low prices — a problem known as sequence-of-returns risk. Keeping one to three years of withdrawals in a low-risk fund, trimming withdrawals slightly after a bad year, or skipping the annual increase once can make a plan much more resilient.