Retirement income
How much can you withdraw every month?
Tell us what you have, what you will add, and how long the money needs to last. We will work out the monthly income your corpus can actually support, after tax.
What you start with
How you will withdraw
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You can withdraw
Year by year
Based on Option 3, the in-hand figure rising with inflation.
| Year | Opening | Withdrawn | Tax | Closing |
|---|
Compare with a fixed deposit
Same money taken out each month, same growth rate. The only difference is how the tax works.
- Mutual fund:
- Fixed deposit:
What this assumes
- Returns are steady every year. Real markets are not, and a bad run early in the withdrawal phase does more damage than the same run later.
- Units are redeemed oldest first, so gains are long-term once a holding crosses twelve months.
- Equity gains use the ₹1.25 lakh annual exemption once per person, then 12.5% plus cess. Debt gains are taxed at your slab rate.
- Tax is paid out of the corpus, not from other income.
- Exit load, surcharge and any other income or capital gains are not included.
No fee, no obligation
Turning this into a working plan takes a conversation
Leave your details and our team will call you back to go through your holdings and set the withdrawals up properly.
- Which schemes the withdrawals should come from, and in what order
- Exit load, minimum balance and SWP date rules checked before the mandate is registered
- Capital gains statements each year for you and your tax advisor
Wealth North is an AMFI-registered mutual fund distributor (ARN 331653). We are remunerated by commission from the asset management companies whose schemes we distribute, as disclosed in the scheme documents. We do not charge you a fee.
Note: Educational estimate based on the assumptions you enter. Returns are illustrative, not guaranteed, and a poor sequence of returns early in the withdrawal phase can exhaust a corpus that these steady-return figures suggest is safe. Tax rules and limits can change. Wealth North is an AMFI-registered mutual fund distributor, not an investment adviser or tax advisor. Mutual fund investments are subject to market risk; read all scheme related documents carefully. Please consult your tax advisor before acting.
Guide
Living off your investments: how an SWP works
How much you can safely withdraw each month, why a fixed amount loses out to one that rises with inflation, how the tax is worked out, and the risk that does the most damage to a withdrawal plan.
Updated for FY 2026-27.
What an SWP actually is
A Systematic Withdrawal Plan is the reverse of a SIP. Instead of putting a fixed amount in every month, you take a fixed amount out. You tell the fund house how much and on which date, and it sells just enough units to pay you, leaving everything else invested and growing.
It suits anyone who has built a corpus and now needs a monthly income from it: retirees, people between jobs, parents funding a child's education abroad, or anyone who wants a salary-like payment from savings.
How much can you safely withdraw?
The honest answer is that it depends on three things: how long the money must last, what it earns while you draw from it, and how fast prices rise. As a rough guide:
| If the money must last | A reasonable first-year withdrawal | On ₹1 crore that is |
|---|---|---|
| 15 years | 7% to 8% a year | ₹58,000 to ₹67,000 a month |
| 25 years | 5% to 6% a year | ₹42,000 to ₹50,000 a month |
| 30 years or more | 4% to 5% a year | ₹33,000 to ₹42,000 a month |
| Forever, corpus intact | Only the return above inflation | ₹16,000 to ₹25,000 a month |
These assume the withdrawal rises each year with inflation. A fixed amount that never increases can start higher, but it buys less every year, and that is the trap most people fall into.
Why the 4% rule does not transfer neatly to India
The 4% rule came out of American research using US market history, US inflation and a 30-year retirement. Three things make it a poor fit here:
- Inflation runs higher. Indian inflation has typically been well above what those studies assumed, so a withdrawal that keeps pace has to grow faster.
- Returns have been higher too, which pulls in the opposite direction. The two do not cancel out neatly, and the answer depends on your own mix of equity and debt.
- Medical costs. Health inflation outpaces general inflation, and it lands late in retirement, exactly when a fixed withdrawal has lost the most ground.
Treat 4% as a conservative starting point rather than a rule, and check it against your own numbers, your own horizon and your own portfolio.
Sequence of returns. Two retirees can earn the same average return over twenty years and end up in completely different places, purely because of the order the returns arrived in. A sharp fall in the first three or four years, while you are also selling units to live on, does damage the later good years cannot undo, because you sold those units cheap and they are gone. This is why the first five years of withdrawals matter more than any other period, and why keeping two to three years of spending in something stable is worth the lower return it earns.
How an SWP is taxed
This is the part most people get wrong, usually in their own favour. Every withdrawal is partly your own money coming back and partly profit. Only the profit is taxed.
- Equity funds: units held more than twelve months produce long-term gains, taxed at 12.5% plus cess above the ₹1.25 lakh exemption each financial year. Units held twelve months or less are short-term and taxed at 20%.
- Debt funds bought after 1 April 2023: the whole gain is added to your income and taxed at your slab rate. There is no exemption and no long-term concession.
- Units are sold oldest first, so in the early years of a long-held corpus, a large slice of each withdrawal is profit. That proportion changes as you go.
- No TDS for resident investors on mutual fund redemptions, so the tax is yours to declare and pay, including advance tax where it applies. NRIs do face TDS.
SWP, dividends, or a fixed deposit?
| SWP | IDCW (dividend) | Fixed deposit | |
|---|---|---|---|
| How much you get | Exactly what you ask for | Whatever the fund declares | Fixed interest |
| What is taxed | Only the profit inside each withdrawal | The whole payout | All interest earned |
| At what rate | 12.5% plus cess on equity gains above the exemption | Your slab rate | Your slab rate |
| Predictable? | Yes, you set it | No | Yes |
| Capital can grow? | Yes, what stays invested keeps working | Yes, but the payout reduces it | No, only the interest |
For most people needing a monthly income, an SWP wins on both predictability and tax. The fixed deposit is simpler and carries no market risk, and that is a genuine advantage for money you cannot afford to see fall in value.
Which funds should the withdrawals come from?
Drawing from a single equity fund is the simplest setup and the most fragile. A more durable arrangement splits the corpus by when you will need the money:
- The next two to three years of spending in liquid or ultra-short funds, where a market fall cannot reach it.
- The following five to seven years in conservative hybrid or short-duration funds.
- The rest in equity, which has time to recover from anything and provides the growth that keeps the income rising.
You draw from the stable portion, and refill it from equity in the years when markets have been kind. That single habit is what protects you from the sequence risk described above.
Setting one up: the practical details
- Check the exit load before you start. Many equity schemes charge around 1% on units redeemed within a year, which can catch recent purchases.
- Pick a withdrawal date a few days after your regular bills, not before.
- Mind the minimum balance some schemes require, or the SWP can stop unexpectedly.
- Review once a year, not once a month. Raise the withdrawal with inflation, and check whether the stable portion needs refilling.
- Keep the capital gains statement your AMC or RTA issues each year; your tax advisor will need it.
Common mistakes
- Setting a fixed amount and never raising it, then wondering in year fifteen why it no longer covers anything.
- Starting the withdrawal at 8% or 9% because the fund returned 12% last year.
- Holding the entire corpus in equity while drawing from it monthly.
- Assuming no tax is due because no TDS was deducted.
- Using debt funds for the income without realising the whole gain is taxed at slab rate.
Frequently Asked Questions
How much monthly income can I get from ₹1 crore?
Rising with inflation and lasting 25 years, roughly ₹42,000 to ₹50,000 a month before tax, depending on what the corpus earns while you draw from it. If you want the ₹1 crore to stay intact indefinitely, the figure drops to around ₹16,000 to ₹25,000 a month, because you can only spend the return above inflation. The planner above works out your own number.
How long will my corpus last with an SWP?
It depends on how much you draw relative to what the corpus earns. Draw less than the return above inflation and it lasts indefinitely. Draw 6% a year from a corpus earning 8% with 6% inflation and it typically runs 20 to 25 years. Draw 10% and you will usually run out in 12 to 15 years, sooner if markets fall early.
Is SWP better than a fixed deposit for monthly income?
On tax, usually yes. An FD taxes all the interest at your slab rate every year, including interest you never spend. An SWP taxes only the profit inside the money you actually withdraw, and equity gains up to ₹1.25 lakh a year are exempt. The trade-off is market risk: an FD balance never falls, a mutual fund can.
How is SWP taxed in India?
Each withdrawal is split into your original capital and profit, and only the profit is taxed. For equity funds, units held over twelve months are taxed at 12.5% plus cess on gains above ₹1.25 lakh in a financial year, and units held twelve months or less at 20%. For debt funds bought after 1 April 2023, the entire gain is taxed at your slab rate with no exemption.
Is TDS deducted on SWP withdrawals?
For resident investors, no TDS is deducted on mutual fund redemptions. You declare the capital gain in your return and pay the tax yourself, including advance tax where it applies. NRI redemptions are subject to TDS.
What is a safe withdrawal rate in India?
For a 25 to 30 year horizon with the withdrawal rising each year with inflation, 4% to 5% of the corpus in the first year is a reasonable starting point. The widely quoted 4% rule comes from US research with different inflation and market history, so treat it as a guide rather than a rule and check it against your own numbers.
Should my SWP amount increase every year?
If the income is meant to cover living costs, yes. A fixed ₹50,000 a month feels comfortable today but buys roughly a quarter as much after 25 years of 6% inflation. Starting lower and raising the amount each year keeps your actual spending power level, which is what matters in the later years.
Can I do an SWP from an equity fund?
Yes, and the tax treatment is favourable. The risk is that you are selling units every month regardless of price, so a fall early in the withdrawal phase does lasting damage. Most people are better served keeping two to three years of spending in liquid or short-duration funds and drawing from there, refilling from equity after good years.
What happens if the market falls after I start withdrawing?
You end up selling more units to raise the same amount of money, and those units are gone when the recovery comes. This is called sequence of returns risk and it is the single biggest threat to a withdrawal plan. Holding a few years of spending in something stable, and pausing increases in a bad year, are the usual defences.
Can I stop or change my SWP later?
Yes. An SWP is an instruction to the fund house, not a lock-in. You can change the amount, change the date, pause it or stop it whenever you want. Any exit load and the tax on gains already booked still apply.