A Systematic Withdrawal Plan is the mirror image of a SIP: instead of contributing a fixed amount every month into a growing investment, you withdraw a fixed (or inflation-adjusted) amount every month from an existing lump sum, while whatever remains continues to grow or shrink based on market returns. SWP is the structure most people are actually using, whether they call it that or not, the moment they start drawing income from a retirement portfolio, an inheritance, or any other invested lump sum.

Each month, a fixed withdrawal amount is removed from the corpus, and the remaining balance earns the stated return for that month. As long as the monthly withdrawal stays smaller than what the corpus earns on average, the balance can theoretically last indefinitely — even grow. Once withdrawals consistently exceed what the corpus earns, the balance shrinks every month and eventually depletes, with the exact timeline depending on how aggressive the withdrawal rate is relative to the return.

Starting with a $1,000,000 corpus, withdrawing $4,000/month ($48,000/year — a 4.8% initial withdrawal rate), earning 7% annually, with withdrawals increasing 3% each year to keep pace with inflation:

In this example, the 7% return comfortably outpaces even a steadily rising, inflation-adjusted withdrawal — the corpus actually grows throughout the full 30 years rather than depleting, ending higher than where it started. This is a real possibility whenever the long-term return assumption sits meaningfully above the initial withdrawal rate, and it mirrors the same logic behind the classic 4% retirement withdrawal rule: a moderate withdrawal rate relative to a reasonable long-term return can sustain decades of income while still leaving substantial capital intact.

A withdrawal that stays fixed in dollar terms loses purchasing power every year — $4,000 today buys noticeably less in 20 years even at modest inflation. Increasing the withdrawal amount annually keeps your real (inflation-adjusted) spending power roughly constant over time, which is essential for anyone using SWP to fund actual living expenses rather than just preserve a lump sum. The trade-off is that an inflation-adjusted withdrawal grows the dollar amount taken out every single year, which depletes the corpus measurably faster than a withdrawal that never increases — set the annual increase to 0% to model a flat, never-rising withdrawal instead.

This calculator computes your initial withdrawal rate automatically from your starting corpus and monthly withdrawal, so you can immediately see which zone your plan falls into before running the full year-by-year simulation.

SIP and SWP are commonly thought of as the accumulation and decumulation phases of the same overall financial plan. During your working years, a SIP steadily builds a corpus through regular contributions and compounding. Once that goal is reached — retirement, financial independence, or simply needing income from an existing lump sum — SWP takes over, drawing that corpus down (hopefully slowly) to fund ongoing expenses. Use our SIP / Investment calculator to model the build-up phase, and this calculator to model what happens once you start drawing it down.

This calculator assumes a single, constant average annual return for the entire withdrawal period — real markets don't behave this smoothly. A corpus that experiences a sharp market downturn in its first few years of withdrawals is meaningfully more fragile than one that experiences the same downturn after 20 years of growth, because early withdrawals during a depressed market permanently lock in losses that have far less time left to recover. This is called sequence-of-returns risk, and it's one of the most important risks in any SWP or retirement drawdown plan, but a single constant-return model like this one cannot capture it.