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A Systematic Withdrawal Plan (SWP) is the mirror image of a SIP. Instead of adding a fixed amount every month, you withdraw a fixed amount from an existing corpus — typically from mutual funds — while the remaining balance stays invested and continues to grow. It is a popular way to turn a lump sum into a regular income, especially in retirement.
It runs a month-by-month simulation: each month your withdrawal is taken out first, then the remaining balance grows at your expected return. This matters — a simple “corpus ÷ withdrawal” sum ignores the growth on the money still invested, and badly understates how long your corpus can last. If you switch on inflation step-up, the withdrawal amount rises each year so your income keeps pace with prices.
An SWP keeps the remaining balance invested for growth, so it can outlast a simple payout — but the return isn’t guaranteed and varies with the market. An FD payout is fixed and safer, but typically grows the underlying capital more slowly.
There is no guaranteed figure, but many retirement frameworks discuss withdrawal rates in the region of 3–4% of the starting corpus per year for a long retirement, as an initial withdrawal-rate assumption. No withdrawal rate guarantees that a portfolio will last for a particular period. This is education, not a recommendation.
No. SWP withdrawals from mutual funds can attract capital gains tax depending on the fund type and holding period. The figures here are pre-tax; factor tax in separately or with a professional.
