Income
Annuity vs SWP Calculator
Compare an immediate annuity against a systematic withdrawal plan, both starting from the same monthly payout, side by side on tax, inflation and capital.
Last updated 21 August 2026 · Free · No sign-up · Nothing you type leaves your browser
Your corpus
Both paths start with the same amount, so the comparison is fair.
Annuity
Payout as a % of the corpus per year. Immediate annuities in India are typically 6-8%.
SWP, started at the same payout
Set to your inflation assumption to hold purchasing power constant.
Illustrative only — actual tax depends on FIFO matching against your purchase history.
Horizon
Used to show what the flat annuity payout is worth by the end of the horizon.
Both start at the same monthly payout
₹62,500/mo
What ₹1 Cr buys at a 7.5% annuity rate. The SWP below is set to withdraw the same amount, so what differs is what happens next.
Annuity
After-tax monthly income
₹43,750/mo
Real value of that payout after 25 years
₹14,562/mo
The payout never rises, so inflation erodes it every year.
Capital remaining at the end
₹0
The corpus is gone — you exchanged it for the income stream.
SWP
Approx. after-tax monthly income (year 1)
₹59,375/mo
Only the gain portion of each withdrawal is taxed — illustrative, see assumptions.
Corpus runs out after
17 yr 3 mo
Withdrawal keeps rising
6.0%/yr
Unlike the annuity, you control this and can raise it to track inflation.
What happens to the capital
The annuity line sits at zero throughout because the capital was exchanged for the income contract on day one — there is nothing left to track. The SWP line shows what is still invested and could, depending on the withdrawal rate and return, either outlast the horizon or run out.
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The comparison almost nobody runs honestly
Annuities are sold on a headline payout rate. SWPs are usually discussed in isolation, on our own SWP calculator. Rarely are the two put side by side starting from the same monthly income, which is the only way to see what each one is actually trading away to produce that number.
What the annuity gives up
An immediate annuity exchanges capital for a contract: a fixed monthly payment for as long as you live. That payment is fully taxable at your slab rate every year, and under a standard option it never increases — so its purchasing power falls steadily to inflation. In return, you get a payout that cannot run out, regardless of how long you live or how markets behave.
What the SWP gives up
A systematic withdrawal plan keeps the capital invested and under your control. Only the gain portion of each withdrawal is taxed, and you can raise the withdrawal to track inflation. In return, you carry market risk and the real possibility that a high withdrawal rate against poor returns depletes the corpus before you expect it to.
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Frequently asked questions
Which pays more, an annuity or an SWP?
Neither is universally better — they trade different things. An annuity locks in a fixed payout for life at the cost of the capital and any growth in the payout. An SWP keeps the capital invested and lets the payout rise, at the cost of market risk and the possibility of running out. The honest comparison is not "which number is bigger" but which set of trade-offs fits your situation.
Why is annuity income taxed so much more heavily?
Because the entire payment is income in the eyes of tax law — there is no principal-versus-gain split, unlike a mutual fund redemption. An SWP withdrawal is legally a redemption, so only the capital gain embedded in it is taxed, and for equity funds held over 12 months that gain gets long-term treatment with a ₹1.25 lakh annual exemption.
Does the annuity payout ever increase?
Standard immediate annuities in India pay a flat amount for life. A small number of products offer an inflation-linked or annually-increasing option, usually at a meaningfully lower starting payout — always check the specific product rather than assuming any annuity behaves like the other.
What happens to my capital under each option?
Under an annuity, the capital is gone — exchanged for the insurer's promise to pay. Nothing passes to heirs unless you specifically chose a return-of-purchase-price option, usually at a lower rate. Under an SWP, whatever is left when you no longer need it — or when you die — remains part of your estate.
Is the SWP tax figure in this calculator exact?
No — it is a labelled illustration. Actual SWP tax depends on FIFO matching against your specific purchase history, which units are sold, and their individual holding periods and gains. The "assumed gain portion" input lets you see how sensitive the result is to that assumption rather than presenting a single, falsely precise number.