How the SWP Calculator works
A Systematic Withdrawal Plan (SWP) lets you pull a fixed amount out of an invested lump sum on a regular schedule — typically monthly — while the remaining balance stays invested and keeps earning returns. This calculator simulates that process month by month so you can see whether your corpus outlasts your chosen tenure, and if not, roughly when it runs out.
The formula
Starting from the initial corpus P, the balance is updated once per month using the recurrence:
Balance = Balance × (1 + r) − W
where r is the expected annual return divided by 12 (the periodic monthly rate) and W is the fixed monthly withdrawal. Each month, growth is applied first and the withdrawal is subtracted at the end of the period — the same end-of-period convention used for standard annuity math. The calculator repeats this step for every month in the withdrawal tenure, or until the balance can no longer cover a full withdrawal, whichever comes first.
Worked example
Take a $1,000,000 corpus, an $8,000 monthly withdrawal, an 8% expected annual return, and a 15-year tenure. The monthly rate is 0.08 / 12 ≈ 0.667%. Because $8,000 is larger than the corpus's first-month growth of about $6,667, the balance edges down early on, but continued compounding keeps it from running out — after 180 monthly withdrawals totaling $1,440,000, roughly $539,000 remains, with about $979,000 of that combined total generated by investment growth rather than the original principal.
When the corpus runs out sooner
If the monthly withdrawal consistently exceeds what the corpus earns in growth that month, the balance shrinks a little more every period, and the rate of decline accelerates as there's less capital left to generate returns. The calculator detects this case and reports the approximate month the corpus is projected to reach zero, rather than showing a negative balance.
A rough sustainability check
As a starting point, a monthly withdrawal at or below the corpus multiplied by the periodic rate (Corpus × r) will not draw down the balance over time, since the withdrawal is covered by that period's growth alone. Withdrawing more than that steadily consumes principal, which is not necessarily wrong for a fixed-tenure plan — it simply means the corpus is being spent down by design rather than preserved indefinitely.
Assumptions and limits
- The expected annual return is treated as a constant, steady rate — real investments fluctuate, and a sequence of poor early returns can deplete a corpus faster than this steady-rate model suggests.
- Withdrawals are assumed to be a fixed dollar amount that does not increase with inflation; a plan that needs to keep pace with rising costs will draw down faster in real terms than shown here.
- No taxes, fees, or exit loads are modeled — factor those in separately based on your actual account and jurisdiction.