How the SWP calculator works

The model in one paragraph

The calculator simulates your plan one month at a time. In each month it takes out a withdrawal if one is due, adds one month of growth to the balance, and carries the result forward. Withdrawals can rise each year (step-up), occur monthly, quarterly, half-yearly or yearly, and happen at the start or end of the period. Inflation is applied afterwards to express any amount in today’s money. The same code produces the headline numbers, the chart, the suggestions and the schedule, so they always agree.

Formulas

Monthly return

The monthly rate is the annual rate divided by 12: r = R ÷ 12. For an 8% expected return, r = 0.6667%. This nominal-monthly convention matches how mutual fund SWP calculators in India and most online tools work.

One month, withdrawal at the start of the period (default)

Bm = (Bm−1 − Wm) × (1 + r)

One month, withdrawal at the end of the period

Bm = Bm−1 × (1 + r) − Wm

where B is the balance and Wm is the withdrawal due that month (zero in months without a withdrawal).

Step-up

With a yearly increase of g, a withdrawal in SWP year k (counting from 0) is W × (1 + g)k.

Closed form (flat monthly withdrawal)

Without a step-up, the balance after n months has a closed form. For withdrawals at the start of each month:

FV = P(1 + r)n − W × [((1 + r)n − 1) ÷ r] × (1 + r)

Drop the final × (1 + r) for end-of-month withdrawals. The month-by-month model gives the same answer and also handles step-ups and depletion.

Inflation adjustment

An amount received m months from the start is shown in today’s money as value ÷ (1 + i)m/12, where i is the annual inflation rate.

Total returns

Growth earned = final balance + total withdrawn − total invested

Worked example

₹50,000 invested at 10% a year, ₹1,000 withdrawn at the start of each month. Monthly rate = 0.8333%.

Month 1: (50,000 − 1,000) × 0.8333% = ₹408 of growth. After 12 months the balance is ₹42,565. These figures match the standard SWP illustration used by Indian investment platforms.

When the money runs out

If a withdrawal is due and the balance is smaller than it, the calculator pays what is left, records the month as the depletion month, and treats every later withdrawal as unpaid. The headline then shows how long the money lasted and the calendar month it ran out, based on your plan start month.

Reverse calculations

• Most you can take out: the starting withdrawal that leaves exactly zero at the end of the plan.
• Take out only the growth: the withdrawal that leaves the starting amount untouched.
• Keep your buying power: the withdrawal that leaves the starting amount grown by inflation, so it buys the same as today.
• Money you’d need: the starting amount that funds your withdrawal for the whole plan.

Each is solved by bisection on the same month-by-month model to within a fraction of a rupee or cent, with your step-up, frequency and timing applied.

SIP + SWP mode

In the SIP + SWP calculator a contribution phase runs first: the monthly SIP is added at the start of each month, rises by the SIP step-up each year, and grows at the SIP-phase return. The balance at the end of that phase becomes the starting amount for the withdrawal phase, which uses its own return. Inflation is measured from the very start, so “today’s money” always means today.

Assumptions and limits

• Constant return. Real markets vary year to year; a poor start can shorten how long money lasts (sequence-of-returns risk). Use the stress-test grid to see a range.
• No fees or taxes are deducted. Enter a return net of your fund’s expense ratio, and see our guide to SWP tax in India.
• No exit loads are modelled.
• Inflation is constant across the plan.

Results are estimates for planning and education, not investment advice.