π§ SWP Withdrawal Calculator
How long your corpus survives monthly withdrawals.
Months the money lasts
Estimates for planning only, not financial advice.
Start with $500,000, withdraw $3,000 a month, earn 7 percent a year, and the money lasts 617 months, over 51 years. You will have withdrawn $1,848,324 in total, 3.7 times your starting corpus. Withdrawal math is kinder than it looks, until the withdrawal rate crosses the return rate.
How to Use This Calculator
Enter your starting corpus, monthly withdrawal need, expected annual return net of fees, and optionally an annual increase in withdrawals to match inflation. The calculator simulates month by month until the money runs out or 100 years pass.
Enter the corpus and monthly withdrawal. Divide the withdrawal by the corpus: under 4 percent a year is historically safe, over 6 percent is aggressive.
Set a realistic net return. Use 6 to 7 percent for equity-heavy, 3 to 4 for conservative, after fees and inflation if you want real terms.
Add withdrawal growth if withdrawals must rise with inflation, and watch how it shortens the runway.
The Formula
No closed form is needed; the simulation just runs the loop. The key pattern: early on, growth outruns withdrawals and the balance rises; late, withdrawals dominate and it falls. The crossover point decides everything. A 7.2 percent annual withdrawal ($3,000 on $500,000) against 7 percent growth looks balanced, but monthly compounding of withdrawals versus annual-ish growth creates the slow 51-year drain in the example.
Worked Example
$500,000 corpus, $3,000/month, 7 percent return, no growth in withdrawals. Month 1: 500,000 x 1.005833 = $502,917, minus $3,000 = $499,917. The balance dips slightly, then the 7 percent growth compounds on the remaining balance while $3,000 leaves monthly. After 617 months the balance hits zero; total withdrawn: $1,848,324. Raise the withdrawal to $4,000 (9.6 percent/year) and the money lasts about 21 years instead. That cliff between 7 and 9 percent withdrawal rates is the whole game.
The 4 Percent Rule and Its Critics
The famous rule: withdraw 4 percent in year one, adjust for inflation after, and the money lasts 30 years. It came from 1990s US market history. Critics note today's bond yields and high valuations suggest 3.3 to 3.7 percent is safer, while flexible strategies (cutting spending after bad years) can sustain 5 percent plus. This calculator lets you test any rate directly instead of trusting a rule. Try your number with withdrawal growth at 2 to 3 percent to model inflation honestly.
| Withdrawal rate | On $500k | Lasts at 7% (no inflation adj.) |
|---|---|---|
| 3% | $1,250/mo | 100+ years |
| 4% | $1,667/mo | 100+ years |
| 5% | $2,083/mo | ~85 years |
| 7.2% | $3,000/mo | ~51 years |
| 9.6% | $4,000/mo | ~21 years |
Sequence Risk: The Silent Killer
This simulation uses a smooth average return, but real returns arrive lumpy. Two retirees with identical average returns can have opposite outcomes if one hits a bear market in year two of withdrawals: selling shares low to fund spending permanently impairs the corpus. Mitigations: keep 1 to 2 years of withdrawals in cash so you never sell in a crash, use flexible withdrawals that trim spending after down years, and consider a bond tent in early retirement. For the accumulation side of the same math, our retirement savings calculator builds the corpus this calculator spends.
Taxes and Withdrawal Order
Withdrawal math is pre-tax here; reality takes its cut. The tax-efficient order is usually: taxable accounts first, then tax-deferred (traditional IRA/401k), then Roth last, letting the tax-free growth compound longest. In India, SWP from mutual funds faces capital gains on each withdrawal's gain portion. Model the pre-tax runway here, then haircut the withdrawal by your effective tax rate for the honest spendable figure.
SWP vs Dividends: Two Income Philosophies
The systematic withdrawal plan and the dividend strategy both turn a portfolio into a paycheck, but they make opposite bets. SWP bets on total return: you hold the best portfolio you can and sell whatever is needed, accepting that some sales happen in down markets. The dividend approach bets on income stability: you hold dividend payers and spend only the distributions, accepting a portfolio tilted toward mature, slower-growing companies.
The math favors SWP slightly: total-return investing with disciplined withdrawals has historically supported higher inflation-adjusted spending than dividend-only strategies, because you are not restricting the universe. The psychology favors dividends: spending cash that arrived feels safer than selling shares that fell, even when the economics match. A workable hybrid: run an SWP from a total-return portfolio, but hold one to two years of withdrawals in cash so you never sell into a crash. You get the math of SWP with the sleep of dividends.
Withdraw With a Plan, Not a Percentage
A systematic withdrawal plan lives or dies on sequence risk: the same 4 percent that survives most histories fails when a bear market strikes in year one. Build flexibility into the plan, variable withdrawals tied to portfolio performance, a cash buffer for down years, and a withdrawal order that spends taxable accounts before tax-advantaged ones. The calculator sizes the income; the guardrails keep it alive through the decades it needs to last.
Estimates for planning only, not financial advice.
Frequently Asked Questions
What is a systematic withdrawal plan?
A strategy of withdrawing a fixed amount regularly (usually monthly) from an investment corpus while the remainder keeps growing. Common in retirement: the corpus earns returns, you draw income. This calculator simulates exactly how long the money lasts under your assumptions.
How long will $500,000 last withdrawing $3,000 a month?
About 51 years at 7 percent annual return, with $1,848,324 withdrawn in total. At a higher $4,000 monthly withdrawal the same corpus lasts roughly 19 years (225 months). The withdrawal rate relative to the return is what decides the outcome. Small changes in the withdrawal amount move the runway enormously because you are fighting compounding in reverse.
What is a safe withdrawal rate?
The classic 4 percent rule: withdraw 4 percent in year one and adjust for inflation, historically lasting 30 years. Current research suggests 3.3 to 4 percent given today's valuations. Flexible strategies that cut spending after bad market years can safely sustain more.
Should my SWP withdrawals rise with inflation?
Ideally yes, since your expenses will. But inflation-adjusted withdrawals shorten the runway significantly versus flat withdrawals. Model both in the calculator: the gap between them is the true cost of maintaining purchasing power. A common compromise is adjusting for inflation only in years the portfolio gained, which preserves purchasing power in good times without accelerating depletion in bad ones.
What is sequence of returns risk?
The danger that poor early returns permanently damage a withdrawing portfolio, even if long-run averages look fine. Selling assets low to fund withdrawals in a bear market locks in losses. Keep a cash buffer of 1-2 years of spending to avoid forced selling.
Is SWP better than a fixed deposit for retirement income?
SWP usually generates more total income over long periods because the corpus stays invested for growth, but income varies with markets while FD interest is fixed. Many retirees blend both: SWP for growth, FDs or bonds for the near-term spending buffer.
How are SWP withdrawals taxed?
In the US, withdrawals from taxable accounts trigger capital gains on the gain portion; IRA/401(k) withdrawals are ordinary income; Roth withdrawals are generally tax-free. In India, each SWP installment faces capital gains tax on its gain component. This calculator shows pre-tax figures.
What return should I assume for SWP planning?
Use net-of-fee, realistic figures: 6-7 percent for equity-heavy portfolios, 3-4 percent for conservative ones. For extra safety, run a stress case 2 points lower. Overestimating returns is the most common way SWP plans fail. Sequence risk matters as much as the average: a 7 percent average with early crashes depletes far faster than the same average with early gains.
Can I withdraw only the gains and keep principal intact?
That is withdrawing at or below the return rate: on $500,000 at 7 percent, about $2,900 a month. It works in average-return math but not in down years, when any withdrawal eats principal. Treat 'principal protection' as an average outcome, not a guarantee.
When should I start an SWP?
When you need regular income from a lump sum: retirement, a sabbatical, or funding a goal over years. Starting early in a market dip actually helps, since the corpus buys recovery growth. Just ensure the withdrawal rate fits the horizon.