SWP calculator: how long will a corpus last?

What the SWP calculator answers

A systematic withdrawal plan (SWP) redeems a fixed amount from a mutual fund every month while the rest stays invested. The question that matters is whether the money outlasts the withdrawals. The SWP calculator answers it in years: enter a corpus, a monthly withdrawal and a return, and it runs the balance forward one month at a time until it reaches zero or 50 years pass.

How an SWP works in practice, how it is taxed and what a real 2020 start did are covered in SWP for retirement income. This post is about the calculator's inputs and how to read its answer.

The four inputs

The step-up raises the withdrawal once a year, at the start of year two, year three and so on. It is how you model an income that has to keep up with prices. At 0% the withdrawal stays at ₹15,000 for life, which means its buying power falls every year.

The three results

• Total withdrawn: every rupee paid out until the corpus ran dry (or until the 50-year cap).
• Corpus lasts: years and tenths, such as "27.6 years". If the balance is still positive after 50 years, it reads "50+ years (never depletes)".
• Ending balance: "₹0 (depleted)" when the money runs out, or the balance left at the 50-year mark.

Below them sit a Corpus balance over time chart and a table, Year-by-year: corpus & total withdrawn, with four columns: Year, Corpus left, Withdrawn (yr) and Total withdrawn. The row where the balance hits zero is highlighted.

A worked example with the defaults

With ₹20,00,000, ₹15,000 a month, 8% and no step-up, the calculator shows the corpus lasting 27.6 years, with ₹49.60 lakh withdrawn in total and an ending balance of ₹0. Part of the table:

The balance falls slowly for the first decade and fast in the last. Each withdrawal shrinks the base that earns the return, so the shortfall grows every month.

Now move the step-up slider to 5%. The first year still pays ₹1.80 lakh, but by year ten the yearly withdrawal is ₹2.79 lakh, and the corpus lasts 14.2 years with ₹35.60 lakh withdrawn. At 6% it lasts 13.3 years. An income that keeps pace with prices needs a much larger corpus than a flat one.

The line between running out and lasting

The calculator grows the balance by the monthly return first, then takes the withdrawal. At 8% a year, ₹20 lakh earns about ₹13,333 in its first month. That is the dividing line:

• Withdraw ₹13,333 a month or less, with no step-up, and the balance never falls. The calculator reports 50+ years (never depletes), with ₹20.03 lakh still there at the 50-year mark.
• Withdraw ₹15,000, and the corpus is ₹1,667 short in the first month. The gap compounds, which is why 27.6 years, not forever.

The return assumption moves this line as much as the withdrawal does. Keeping ₹20 lakh and ₹15,000 a month:

At 10%, the first month earns about ₹16,667, more than the withdrawal, so the balance grows. Two points of assumed return separate a corpus that runs out in its 28th year from one that never runs out. That is a reason to pick a return you could defend, not the one that makes the chart look good.

What the calculator leaves out

1. Market falls. The return arrives smoothly every month. A real SWP that starts just before a fall sells more units at low prices, and the corpus may not recover even if the long-run average is the same. Sequence-of-returns risk explains why the early years matter most.
2. Tax. The withdrawals are pre-tax. Each one is a redemption, and only the gain inside it is taxed, with units sold oldest first. How SIP redemptions are taxed works through the first-in, first-out order.
3. Exit loads and costs. Use a return that is already net of the fund's expense ratio, and check the fund's exit-load period before the first withdrawal.
4. A 50-year cap. Anything still standing at 50 years is reported as never depleting.

Where it fits

The SWP calculator starts from a corpus you already have. If you are still building one, the retirement calculator works backwards from your monthly spending, and the financial freedom calculator runs the saving years and the withdrawal years on one timeline. For a way to hold the corpus so that a bad year does not force selling equity, see the three-bucket retirement strategy. Drawing an income with an SWP covers the mechanics, and SWP has the glossary definition.

Run your own corpus through the SWP calculator with a step-up of at least the inflation you expect, then again with a return two points lower. If the plan still lasts, it has some margin. None of this is advice on how much to withdraw or which fund to hold.