- From ₹1 crore at an assumed 10% a year, the most you can start with, raising it 6% a year for inflation, and still last 25 years is about ₹52,800 a month.
- Start at ₹60,000 instead and the money runs out after about 20 years.
- If returns are 8% rather than 10%, the safe starting amount falls to about ₹43,100. The return assumption matters more than anything else.
- Only the profit part of each withdrawal is taxed. In year one, ₹6 lakh of withdrawals included only ₹29,976 of profit and ₹6,235 of tax.
Whether it is retirement savings, a bonus, the sale of a flat or an inheritance, a lump sum raises the same question: how much can I take every month, and for how long? An SWP from a mutual fund is one popular answer. You keep the money invested, and the fund sells just enough units each month to pay you a fixed amount.
It sounds simple, and it is. But picking the monthly amount is a real decision, because the money that stays invested has to keep paying you for decades.
The mistake: a fixed amount forever
Say you withdraw ₹50,000 a month from ₹1 crore and never change it. At an assumed 10% return, the money lasts 25 years easily, and there would even be ₹4.67 crore left.
But ₹50,000 in 25 years buys about what ₹11,700 buys today, with 6% inflation. A flat withdrawal looks safe on paper and becomes a smaller and smaller income in real life. A realistic plan raises the withdrawal every year to keep up with prices.
With a rising withdrawal, the picture changes
₹50,000 a month, rising every year, is close to the limit. The calculator finds the largest starting amount that still lasts the full 25 years: ₹52,820.
Open this example →Here is how the starting amount and the return change the outcome, all from ₹1 crore with a 6% yearly rise:
| Start with | Return assumed | Result |
|---|---|---|
| ₹50,000 a month | 10% | Lasts 25 years |
| ₹60,000 a month | 10% | Runs out in about 20 years |
| ₹50,000 a month | 8% | Runs out in about 21 years |
| ₹40,000 a month | 10% | Lasts 30 years, ₹2.77 Cr left |
Two lessons stand out. A small change in the starting amount has a big effect late in the plan, and so does a small change in the return. That is why a cautious return, such as 8%, is a better planning number than a hopeful one.
Try it at 8% →A useful rule of thumb
The safe starting amounts above work out to about 5–6% of the corpus in the first year (₹43,100 to ₹52,800 a month from ₹1 crore), when the income rises with inflation over 25 years. Longer plans need a lower start. That is similar to the “safe withdrawal rate” idea in FIRE planning, where early retirees use 3–4% because their money has to last 40 years or more.
The tax advantage: only profit is taxed
Each SWP payment is part your own money coming back and part profit. Only the profit part is taxed. Early in the plan, almost all of each payment is your original money:
In the first year, profits are short-term and taxed at 20% plus cess. From the second year, gains on units held over a year are taxed at 12.5%, and the first ₹1.25 lakh of long-term gains each year is tax-free.
Compare that with FD interest, where every rupee of interest is taxed at your slab rate each year. For someone with a pension or other income in a higher slab, the difference can be large. If the money has been invested for years before you start, more of each withdrawal is profit, so the tax is higher. The SWP calculator lets you enter how much of the money is already profit.
The risk an FD doesn’t have
An equity fund can fall 30% in a bad year. If that happens early in your withdrawals, you are selling more units at low prices, and the plan may not recover. This “sequence risk” is the main danger of an SWP. Common ways people handle it:
- Keep one to three years of withdrawals in a liquid or debt fund, and refill it from equity in good years.
- Use a hybrid or balanced fund rather than pure equity for the withdrawal pot.
- Be willing to skip the yearly increase after a bad year.
Frequently asked questions
How much monthly income can ₹1 crore give through an SWP?
At an assumed 10% return, about ₹52,800 a month to start, rising 6% a year, lasts 25 years. At 8%, it is about ₹43,100. A fixed amount that never rises can be higher, but loses buying power each year.
How is an SWP taxed?
Only the profit part of each withdrawal is taxed. For equity funds, profit on units held up to a year is taxed at 20%, and long-term profit above ₹1.25 lakh a year at 12.5%, plus cess. Debt fund profits are taxed at your slab rate.
Is an SWP better than an FD for monthly income?
An SWP can be more tax-efficient and can grow, but its value can fall with markets. An FD pays a known rate with no market risk, but all its interest is taxed each year. Many retirees use both.
What return should I assume for an SWP?
A cautious number. Returns vary from year to year and are not guaranteed. Planning with 8% rather than 10% or 12% gives a safer monthly amount.
How much can your money pay you?
Enter your amount, a monthly withdrawal and a yearly rise, and see how long it lasts.
Open the SWP calculator →Returns of 8–10% a year and 6% inflation are assumptions for illustration. Returns are not guaranteed and this is not investment advice. Tax uses the equity fund rules in the SWP calculator, with average cost and each 12 months treated as one tax year.