How SWP Math Works (With Worked Example)
Every month in a Systematic Withdrawal Plan, your corpus earns a monthly return i = annualRate / 12 while paying out a fixed withdrawal W at the end of each month:
Worked Example
Suppose you retire with ₹1,00,00,000 (₹1 Cr) in a Balanced Advantage Fund earning 10% p.a. (i = 0.008333/month) and withdraw ₹60,000/month:
- In Month 1, your ₹1 Cr earns ₹83,333 in growth and pays out ₹60,000, leaving ₹1,00,23,333.
- Because your monthly growth (₹83.3K) exceeds your withdrawal (₹60K), your corpus never depletes—after 20 years you will have withdrawn ₹1.44 Crore and still hold ₹2.77 Crore!