Is SWP better than FD interest for retirement?

For investors in the 20-30% tax bracket, SWP from equity funds is far more tax-efficient than FD interest. FD interest is taxed annually at your slab rate. SWP from equity funds held over 1 year is taxed as LTCG at just 12.5% — only on the gain portion, not the full withdrawal.

How does SWP work during a market crash?

During a market crash, your fund's NAV falls. Fixed SWP withdrawals force you to sell more units to get the same rupee amount, depleting your corpus faster. To protect against this, keep 1-2 years of expenses in a liquid fund or FD, and pause SWP from equity funds during sharp corrections.

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Q: What is a safe SWP withdrawal rate in India?

A commonly used rule is the 4% rule — withdrawing 4% of your corpus annually (about 0.33% monthly). For a ₹1 crore corpus at 8% return, the sustainable monthly withdrawal is approximately ₹66,000. Withdrawing more than the monthly return means your corpus will eventually deplete.

Find your sustainable monthly withdrawal, see exactly when your corpus depletes, and plan a retirement income that lasts as long as you need it to.

📚 Understand This Calculator

What is SWP? Your corpus as a salary-paying machine

A Systematic Withdrawal Plan (SWP) is the retirement equivalent of a SIP — but in reverse. Instead of putting money into a fund every month, you take a fixed amount out. The remaining corpus stays invested, keeps earning returns, and funds future withdrawals. Done right, your corpus can last decades. Done wrong, it depletes in years.

🇮🇳 Real-Life Example

Raghunath retires at 60 with a ₹1 crore corpus in a balanced fund earning 8% annually (≈0.67% monthly). He wants ₹50,000/month to live on.

Monthly return on ₹1 crore at 0.67%: ₹66,667. He withdraws only ₹50,000. The surplus ₹16,667 stays invested and grows the corpus. His corpus actually grows over time — he can never outlive it at this withdrawal rate.

His neighbour Suresh takes ₹80,000/month from the same corpus. He withdraws ₹13,333 more than the monthly return. His corpus shrinks every month. It depletes in about 19 years — when he's 79. He outlives his money.

💡 The Key Insight

The "sustainable withdrawal" is the amount equal to your corpus's monthly return. Withdraw exactly that amount and your corpus never depletes. Withdraw less and your corpus grows. Withdraw more and you are racing against time. This calculator shows you exactly which zone you are in.

⚠️ Common Mistake

Not accounting for inflation. Even if your corpus lasts 25 years, ₹50,000/month in 2025 will feel like ₹17,000/month in 2050 (at 6% inflation). Consider increasing your SWP amount by 5-6% every year to maintain purchasing power — this calculator shows you the impact of a fixed vs inflation-adjusted withdrawal.

💰 Your Corpus & Withdrawal

Retirement Corpus (₹)

Monthly Withdrawal (₹)

Expected Annual Return (%)

Use 6-8% for debt/balanced, 10-12% for equity

Project for (Years)

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Enter your corpus details

See how long your retirement savings last

SWP Sustainability Table

Monthly withdrawals from ₹1 crore corpus — how many years the corpus lasts at different return rates

Monthly Withdrawal	At 6% Return	At 8% Return	At 10% Return	At 12% Return
₹30,000	Forever ✓	Forever ✓	Forever ✓	Forever ✓
₹50,000	37 years	Forever ✓	Forever ✓	Forever ✓
₹75,000	18 years	26 years	Forever ✓	Forever ✓
₹1,00,000	12 years	17 years	31 years	Forever ✓
₹1,50,000	8 years	10 years	14 years	24 years

Frequently Asked Questions

What is SWP in mutual funds? ▾

SWP (Systematic Withdrawal Plan) lets you withdraw a fixed amount from your mutual fund corpus every month. The remaining corpus stays invested and continues earning returns. It is the most tax-efficient way to create a regular income from investments in retirement.

What is a safe SWP withdrawal rate in India? ▾

A widely used guideline is the 4% annual rule — withdrawing 4% of corpus per year (0.33% monthly). For a ₹1 crore corpus at 8% return, the sustainable monthly withdrawal is approximately ₹66,000. Withdrawing more than the monthly return means your corpus will eventually deplete.

Is SWP taxed? How is SWP taxed vs FD interest? ▾

Each SWP redemption from an equity fund is treated as a partial redemption. The gain portion is taxed as LTCG (12.5%) if units are held over 12 months, or STCG (20%) if under 12 months. Crucially, only the GAIN is taxed — not the full withdrawal amount. FD interest, by contrast, is fully taxed at your slab rate (up to 30%) every year. For retirees in higher tax brackets, SWP from equity funds is far more tax-efficient.

What happens to SWP during a market crash? ▾

During a crash, NAV falls. Your fixed SWP forces you to sell more units to generate the same rupee amount, depleting your corpus faster at exactly the wrong time. The solution: keep 1-2 years of expenses in a liquid fund or sweep FD, and temporarily pause SWP from equity funds during corrections. Resume once markets recover.

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