What an SWP does
A systematic withdrawal plan sells a fixed amount of your mutual fund units every month and pays it to your bank account. The rest stays invested and keeps earning. It is a common way to draw a retirement income from a corpus.
How to read the result
- If the monthly withdrawal is less than the monthly return on the corpus, the corpus can grow while you withdraw.
- If you raise withdrawals every year for inflation, the corpus shrinks faster. Try 5–6% a year to be realistic.
- Real returns vary year to year. A bad market in the first few years hurts most, so keep 2–3 years of withdrawals in a safer debt fund.
Tax on SWP
Each withdrawal is partly your original money and partly gain. Only the gain is taxed: for equity funds held over 12 months, 12.5% above ₹1.25 lakh of gains a year. That often makes an SWP more tax-efficient than FD interest, which is fully taxable.
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Questions people ask
How much can I withdraw every month?
For a 25–30 year retirement, many planners start at 3–4% of the corpus a year, raised with inflation. For ₹1 crore, that is about ₹25,000–33,000 a month.