SWP for retirement income: how much can you take out each month?
Rules for FY 2026-27 · Checked 24 October 2026
A systematic withdrawal plan (SWP) pays you a fixed sum every month by selling a few mutual fund units, while the rest stays invested. With ₹1 crore earning 9% a year and withdrawals rising 6% a year for inflation, starting at ₹44,000 a month lasts 30 years; starting at ₹50,000 lasts about 25.
How an SWP works
You tell the fund house how much you want each month and on what date. On that date it sells enough units to pay you that amount. What is left keeps growing (or falling) with the market.
If the fund earns more than you take out, the corpus can last indefinitely. If you take out more, it shrinks, slowly at first and then faster.
How long ₹1 crore lasts
These assume the fund earns 9% a year and you raise your withdrawal by 6% every year so it keeps up with prices. Both are assumptions, not promises.
| Starting withdrawal | Share of corpus in year 1 | Money lasts |
|---|---|---|
| ₹30,000 a month | 3.6% | More than 50 years |
| ₹40,000 a month | 4.8% | About 36 years |
| ₹44,000 a month | 5.3% | 30 years |
| ₹50,000 a month | 6% | About 25 years |
| ₹60,000 a month | 7.2% | About 19 years |
| ₹75,000 a month | 9% | About 14 years |
A rough rule from this table: at these returns, starting at about 5% of your corpus a year gives you around 30 years. Retiring earlier, or expecting lower returns, means starting lower.
A fixed withdrawal that never rises looks safer: ₹75,000 a month at 9% never runs out. But at 6% inflation its buying power halves in about 12 years.
Try your own numbers
The risk of a bad start
Returns do not arrive evenly. A market fall in the first few years hurts most, because you are selling more units at low prices just when the corpus is largest. A common way to soften this:
- Keep 2–3 years of withdrawals in a liquid or short-term debt fund, and run the SWP from there.
- Keep the rest in equity or hybrid funds, and top up the safe part every year or two, preferably after good years.
- Review once a year. If markets have fallen hard, skip that year’s increase.
How SWP is taxed, compared with FD interest
Each SWP payment is a sale of units. Only the gain in the units sold is taxed, not the whole payment. In the early years most of each payment is your own money coming back.
- Equity funds: units held over 12 months are taxed at 12.5% on gains above ₹1.25 lakh a year; units held 12 months or less at 20%.
- Debt funds bought from 1 April 2023: gains are taxed at your slab rate.
- FD interest: the whole amount is taxed at your slab rate every year.
Take a retired person with a ₹10 lakh pension who needs ₹6 lakh more a year, under the new regime:
| From FD interest | From an equity fund SWP | |
|---|---|---|
| Taken in the year | ₹6 lakh, all interest | ₹6 lakh, of which ₹2.4 lakh is gain |
| Extra tax for the year | ₹1,13,100 | ₹14,950 |
The comparison flatters the SWP a little, because ₹3.6 lakh of its payout is the person’s own money, while FD interest is all income. But the gap is real: SWP is taxed only on gains, mostly at 12.5%, and only when units are sold.
Frequently asked questions
Is SWP income guaranteed?
No. The payment is fixed only as long as there are units to sell. If the fund falls or you withdraw too much, the money runs out sooner.
Which fund should I use for an SWP?
That depends on your other income and how much risk you can bear. Many retirees use a hybrid fund or a mix of equity and debt funds, with a few years of withdrawals kept in a liquid fund.
Can I stop or change an SWP?
Yes. Ask the fund house or your platform to stop it or change the amount; the remaining units stay invested.
SWP or SCSS for a retiree?
They do different jobs. SCSS gives a fixed, safe income up to ₹30 lakh per person. An SWP can grow with inflation but can also fall. Many retirees use SCSS for the base and an SWP for the rest.
Sources: AMFI, Income Tax Department