SWP Calculator

A systematic withdrawal plan, SWP, turns a lump sum into a salary: you take out a fixed amount every month while the rest stays invested. The central question is whether the money outlasts you. If the investment grows faster than you withdraw, the balance rises; if you withdraw faster, it falls and one day runs out. This page runs the monthly arithmetic and shows both the end result and the point where a plan fails.

The monthly arithmetic

Every month the withdrawal is taken first, and what remains earns one month of growth at the yearly return divided by 12. The next month’s balance is therefore (balance − withdrawal) × (1 + return ÷ 12). Once a year the withdrawal can be raised by a percentage, for example to follow inflation. If the balance falls below the withdrawal, the last of it is paid out and the page reports the month the money ran out.

A worked example

The defaults invest 50,00,000, withdraw 30,000 a month at 9% a year for 20 years. The total withdrawn is 72,00,000, and the balance after 20 years is 98,58,877, nearly double the starting amount. The first-year withdrawal rate is 7.20%, and the largest flat withdrawal that would use the money up in exactly 20 years is 44,651 a month. The table shows the balance at the end of year one as 50,90,993, year two as 51,90,521 and year three as 52,99,386. The second sample invests 20,00,000, withdraws 30,000 at 8% for 15 years: the withdrawal rate is 18%, the money lasts only 7 years and 4 months, and 26,30,012 is withdrawn in total.

The sustainable amount

The last result answers the planning question directly. The largest flat withdrawal is found by setting the end balance to zero in the closed form: withdrawal = amount × i ÷ ((1 + i) × (1 − (1 + i)^−n)), where i is the monthly return and n the number of months. Anything below it leaves money at the end; anything above it runs out early. It assumes the return stays constant, so treat it as a ceiling in good conditions, not a safe level.

Raising the withdrawal

Costs rise with inflation, so a flat withdrawal buys less each year. Setting a yearly raise of 5 or 6 percent models a withdrawal that keeps its buying power, and you will see the money lasting a shorter time. This is the honest test for a retirement income: the earlier plan that survives 20 years with a flat 30,000 may not survive with a rising one.

Choosing the return

The return has the biggest effect. A fund that has averaged 12 percent over twenty years may not do so in the next twenty, and the sequence matters: poor returns in the first years hurt far more than poor returns later, because withdrawals leave less money to recover. Try a lower return as well as your expected one, and look at how far the plan is from failing.

Limits

The page does not include tax on the gains in each withdrawal, exit loads or fund costs. For the effect of tax and a comparison with a fixed deposit, use the SWP versus FD calculator. Returns are constant and not guaranteed, and a real fund will move up and down.

Related tools

• SWP vs FD Calculator adds tax and puts a fixed deposit alongside the fund.
• Retirement and FIRE Calculator sizes the pot that a withdrawal plan would draw from.
• SIP Calculator builds the corpus before the withdrawals begin.
• FD Calculator values the alternative of a fixed deposit at a stated rate.