What is a Systematic Withdrawal Plan (SWP)?
A Systematic Withdrawal Plan (SWP) allows investors to withdraw a specific sum of money from their Mutual Fund investments at regular intervals (monthly, quarterly, or annually).
It is essentially the reverse of an SIP. While SIP is for wealth accumulation, SWP is for wealth distribution, making it the gold standard for retirees looking for a regular "pension-like" income from their corpus.
SWP vs Dividend (IDCW): Which is Better?
| Feature | SWP (Growth Option) | Dividend (IDCW) |
|---|---|---|
| Payout Amount | Fixed (You decide) | Uncertain (AMC decides) |
| Taxation | Capital Gains (Lower) | Slab Rate (Higher) |
| Control | Full Control | No Control |
| Best For | Monthly Income | Occasional Payouts |
Taxation on SWP (2025 Rules)
SWP is highly tax-efficient because you are not taxed on the entire withdrawal amount—only on the Capital Gains portion of it.
- Equity Funds (LTCG): If held for >1 year, gains above ₹1.25 Lakh/year are taxed at 12.5%.
- Debt Funds: Taxed as per your income tax slab (no indexation benefit for fresh investments after April 2023).
How Long Will My Money Last? (Safe Withdrawal Rate)
Financial planners often cite the "4% Rule". It suggests that if you withdraw 4% of your retirement corpus annually (adjusted for inflation), your money should last for 30 years or more without depleting completely.
How This Calculator Helps Your Planning
Corpus Longevity
See exactly how many years your corpus will last with a fixed monthly withdrawal.
Capital Protection
Understand whether withdrawals are eating into your principal or still allowing growth.
Inflation Awareness
A fixed withdrawal loses purchasing power over time—plan smarter.
SWP Calculation Logic
The remaining balance after systematic withdrawals is calculated using the annuity withdrawal formula:
- Bal: Final Balance
- P: Initial Investment
- W: Monthly Withdrawal
- i: Monthly Return Rate
- n: Total Months
Key Advantages of SWP
- Tax Efficient: Capital gains tax is lower than FD interest.
- Flexible: Pause, stop, or change withdrawals anytime.
- Cost Averaging: Units are sold gradually over market cycles.