How Long Can an SWP Last?

“How long will my money last?” is the question a Systematic Withdrawal Plan exists to answer, and it is the one most often answered badly. Divide the corpus by the monthly withdrawal and ₹1 crore at ₹50,000 a month gives a clean 200 months — 16 years and 8 months. That number is wrong in both directions at once: it ignores the return the remaining balance earns, which extends the plan, and it ignores inflation, which shortens it. Getting to an honest answer means being specific about four things.

The four inputs that decide the answer

An SWP is a race between two forces. Withdrawals shrink the balance; returns grow whatever is left. How long the corpus lasts is entirely a question of which force is winning, and by how much, in each individual month. Four numbers set that:

• The starting corpus.
• The monthly withdrawal — usefully expressed as an annual percentage of the corpus.
• The return the invested balance earns while you are drawing from it.
• How much the withdrawal rises each year.

The first two are the ones people focus on. The last one is usually the one that decides the outcome.

The flat-withdrawal illusion

Take ₹1 crore and a ₹50,000 monthly withdrawal — an initial withdrawal rate of 6% a year. At a 9% annual return with the withdrawal held flat forever, the corpus does not deplete at all: growth outruns the draw and the balance rises year after year. On that projection, the answer to “how long can it last?” is, cheerfully, indefinitely.

Now increase that withdrawal by 6% a year so it keeps pace with inflation, and change nothing else. The same corpus, at the same return, runs dry in roughly 23 years and 2 months. That is the entire distance between a plan with no visible end and one that terminates in your mid-eighties if you began at 60.

The flat version is not really a plan, though — it is a plan to become poorer. India's inflation-targeting framework was renewed for the five years to March 2031 at 4% CPI with a 2% to 6% tolerance band, and household budgets have tended to run at the upper end of that or beyond, particularly once healthcare is in the mix. At 6% inflation, a withdrawal that covers costs comfortably at 60 buys less than half as much by 72. Holding the number flat does not make the money last longer in any meaningful sense; it moves the shortfall off the corpus and onto your standard of living. The inflation calculator makes that erosion concrete for a specific household budget.

What the numbers actually look like

Holding ₹1 crore, a 9% return and a 6% annual increase constant, and varying only the starting withdrawal rate, the plan lasts:

• 3.6% of corpus (₹30,000 a month) — nearly 57 years.
• 4.2% (₹35,000 a month) — about 41 years.
• 4.8% (₹40,000 a month) — about 32 years.
• 5.4% (₹45,000 a month) — about 27 years.
• 6.0% (₹50,000 a month) — about 23 years.

Two things stand out. The relationship is nowhere near linear: dropping from 6% to 5.4% — ₹5,000 a month — buys almost four extra years, while dropping from 4.2% to 3.6% buys sixteen. And the interesting range is narrow. Almost the whole span between “runs out in your seventies” and “outlives you comfortably” sits inside about two and a half percentage points of withdrawal rate. That is a small target to hit by intuition, which is why simulating your own numbers month by month beats applying a rule of thumb.

Return sensitivity is just as sharp. At ₹50,000 a month with a 6% annual increase, ₹1 crore lasts about 18 years 7 months at a 7% return, about 23 years 2 months at 9%, and about 33 years 6 months at 11%. Two percentage points of assumed return moves the depletion date by roughly a decade — and nobody gets to pick which of those three assumptions turns out to be the right one.

It is really one number, not four

There is a shortcut buried in all of this. Because the withdrawal rises with inflation while the corpus grows at the nominal return, what actually drives the outcome is the gap between the two — the real return. A 9% nominal return against 6% inflation is a real return of about 2.8%. Run the same ₹1 crore at a flat ₹50,000 a month against that 2.8% real return and the answer is about 22 years and 4 months, within a rounding error of the 23-year figure from the full nominal simulation.

This reframing strips away a common source of false comfort. A plan built on 12% returns and 6% inflation is not meaningfully more robust than one built on 8% and 2% — the gap is what carries it. And in a country whose inflation tolerance band tops out at 6%, a plan whose survival depends on a real return of four or five percent is making a strong claim about the future. The real return calculator converts nominal assumptions into that single figure.

Why the 4% rule needs testing rather than trusting

The most-quoted answer to this question is the 4% rule: withdraw 4% of the corpus in year one, increase it with inflation, and the money should last around 30 years. Applied to ₹1 crore at a 9% return with 6% annual increases, the arithmetic is generous — a ₹33,333 monthly withdrawal lasts about 45 years. Drop the return to 8% and it falls to about 35 years; at 7%, to about 29 years, which is no longer a comfortable margin for someone retiring at 55.

The rule also came out of historical US market and inflation data over rolling 30-year periods. Indian inflation has generally run higher, the equity market history is shorter, and the tax treatment is entirely different. None of that makes 4% a bad starting intuition; it makes it a hypothesis to stress-test rather than a conclusion. The withdrawal rate calculator exists for that kind of stress-testing.

The leakage a gross projection misses

Every figure above is pre-tax and pre-cost, as almost all SWP projections are. Two things quietly shorten the real-world answer.

Tax is the larger one. Because each withdrawal is a redemption rather than an interest payment, only the capital gain embedded in it is taxable, and redemptions are matched first-in-first-out so the oldest units go first. For equity mutual funds under the rules current as of this writing, long-term gains on units held over twelve months are taxed at 12.5% above a ₹1.25 lakh exemption per financial year, and short-term gains at 20%. That is a genuinely favourable structure next to interest income, where the whole receipt is taxable — but favourable is not free. Whatever tax is due comes from somewhere: either out of the amount reaching the bank account, or out of a slightly larger redemption, and the second option depletes the corpus faster than the projection shows.

Exit load is the smaller one and easier to plan around. Many equity schemes charge a load, commonly in the region of 1%, on units redeemed within a defined period after purchase — scheme-specific, and disclosed in the scheme information document. If an SWP begins too soon after the money goes in, the earliest withdrawals can be redeeming units still inside that window. Tax rates and scheme terms both change, so treat the figures here as a snapshot and confirm the current position before relying on them.

The risk none of this arithmetic captures

Every projection in this article applies the same return to every single month. Real markets do not cooperate. If a sharp fall lands in the first few years of the withdrawal phase, the SWP is selling units at depressed prices to fund living costs — permanently removing units that would otherwise have participated in the recovery. Two retirees with identical average returns across 25 years can end up with very different depletion dates purely because of the order in which those returns arrived. That is sequence-of-returns risk, and it is the main reason a smooth-return answer should be read as a central case rather than a forecast.

What to do with the answer

If the depletion year lands uncomfortably early, the levers are limited and each one is measurable: a larger starting corpus, a smaller starting withdrawal, a later start date, a smaller annual increase, or a longer allocation to growth assets in exchange for accepting more volatility in the balance. Their effects are not equal. In the ₹1 crore example, raising the corpus by 25% and cutting the annual increase from 6% to 4% push the depletion date out by roughly the same nine or ten years — and one of those is considerably harder to arrange than the other.

The more useful habit than finding the answer is finding the range. Run the plan at your central assumption, then run it again two percentage points lower on return and one point higher on inflation. If it still works, there is real margin in it. If the depletion date collapses, the plan was not sustainable — it was optimistic, which is a different thing that looks identical right up until it is tested. You can also work the problem backwards from a target income with the retirement corpus calculator, which asks what starting capital makes the money last exactly as long as required.