# How long will my SWP last?

Computes what is left of an investment after fixed monthly withdrawals, how much you take out, the interest earned, and when the money runs out.

- Page: https://www.acalculator.org/finance/swp-calculator
- JSON spec: https://www.acalculator.org/finance/swp-calculator.json
- Version: 4d26e5072cf8

## Default answer

Example with the default inputs (Amount invested $100,000.00, Take out each month $1,000.00, Expected return (per year) 8%, For how long? (years) 10): Taking $1,000.00 a month from $100,000.00 at 8% a year leaves $39,017.99 after 10 years, after taking out $120,000.00.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| totalInvestment | Amount invested | The lump sum invested at the start. |
| withdrawalAmount | Take out each month | The fixed amount withdrawn at the end of every month. |
| expectedReturn | Expected return (per year) | The expected yearly return, as a nominal rate compounded monthly (the yearly rate divided by 12 each month). |
| timePeriod | For how long? (years) | How many years of withdrawals to plan for. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| balance | Left at the end | The balance after the last month of the plan, or 0 when the money runs out first. |
| takenOut | Total taken out | All withdrawals added up. |
| interest | Total interest earned | All the return earned: what is left plus what was taken out, minus the amount invested. |
| outcome | What the plan does | In words: what is left after the years of the plan, or how long the withdrawals last when the money runs out first. |
| lasts | The money runs out after | How long the withdrawals last when the money runs out before the end of the plan. |
| sustainable | Most you can take each month | The level monthly withdrawal that uses up the investment exactly at the end of the plan: the annuity payment for the amount invested. |

## Method

Each month, add interest at the yearly rate ÷ 12, then take out the withdrawal (or whatever is left, if that is less).

## Assumptions

- The return is a nominal yearly rate compounded monthly: each month earns the rate ÷ 12.
- Withdrawals come out at the end of each month, after that month’s interest.
- When the balance cannot cover a withdrawal, the last withdrawal is what is left and the plan stops.
- The return does not change. Tax, exit loads, and fees are not included.

## Worked examples

1. totalInvestment = $100,000.00, withdrawalAmount = $1,000.00, expectedReturn = 8%, timePeriod = 10 gives balance = $39,017.99, takenOut = $120,000.00, interest = $59,017.99, sustainable = $1,213.28. Source: U.S. Securities and Exchange Commission, Investor.gov compound interest formula. https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator.
2. totalInvestment = $50,000.00, withdrawalAmount = $1,500.00, expectedReturn = 8%, timePeriod = 1 gives balance = $35,475.09, interest = $3,475.09, takenOut = $18,000.00. Source: U.S. Securities and Exchange Commission, Investor.gov compound interest formula. https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator.
3. totalInvestment = $100,000.00, withdrawalAmount = $2,000.00, expectedReturn = 6%, timePeriod = 10 gives balance = $0.00, takenOut = $115,361.36, lasts = {"years":4,"months":10}. Source: U.S. Securities and Exchange Commission, Investor.gov compound interest formula. https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator.
4. totalInvestment = $100,000.00, withdrawalAmount = $1,000.00, expectedReturn = 0%, timePeriod = 10 gives balance = $0.00, takenOut = $100,000.00, interest = $0.00, lasts = {"years":8,"months":4}. Source: U.S. Securities and Exchange Commission, Investor.gov compound interest formula. https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator.

## FAQ

### What is a Systematic Withdrawal Plan (SWP)?

A Systematic Withdrawal Plan (SWP) is an investment strategy where you invest a lump sum amount and then withdraw a fixed amount regularly (usually monthly) from your investment corpus. The remaining amount continues to earn returns, helping you generate a steady income stream while potentially preserving your capital. Our systematic withdrawal plan calculator helps you plan and optimize your withdrawal strategy.

### How does the SWP calculator work?

The SWP calculator calculates your total withdrawals, total interest earned, and final corpus value based on your initial investment, monthly withdrawal amount, expected return rate, and time period. Each month it adds that month's return (the yearly rate divided by 12), then takes out your withdrawal. If the money runs out before the end, it tells you when. It also shows the most you can withdraw each month so the money lasts the whole period.

### What is the difference between SWP and SIP?

SIP (Systematic Investment Plan) involves investing a fixed amount regularly to build wealth, while SWP (Systematic Withdrawal Plan) involves withdrawing a fixed amount regularly from an existing investment corpus. SIP is for wealth creation, while SWP is for income generation from accumulated wealth. Our systematic withdrawal plan calculator helps you understand the withdrawal phase of your investment journey.

### When should I use an SWP?

SWP is ideal for retirees who need regular income from their investments, individuals who want to generate passive income from their savings, or anyone who wants to create a steady income stream while potentially preserving their capital. It's particularly useful for retirement planning and income generation. Our systematic withdrawal plan calculator helps you determine the optimal timing and amount for your withdrawals.

### What factors affect my SWP returns?

Your SWP returns depend on your initial investment amount, monthly withdrawal amount, expected return rate, and time period. Higher withdrawal amounts relative to your investment will deplete your corpus faster, while higher returns can help sustain withdrawals longer. Our systematic withdrawal plan calculator allows you to analyze how these factors impact your long-term financial sustainability.

### Can I change my withdrawal amount during the SWP?

Yes, most mutual funds and investment platforms allow you to modify your SWP withdrawal amount. You can increase, decrease, or pause withdrawals based on your changing financial needs. However, it's important to consider the impact on your long-term financial goals. Our systematic withdrawal plan calculator can help you model different withdrawal scenarios.

### What happens if my investment returns are lower than expected?

If returns are lower than expected, your corpus may deplete faster than planned. You might need to reduce your withdrawal amount or extend your investment period. It's important to have a buffer and be flexible with your withdrawal strategy. Our systematic withdrawal plan calculator helps you stress-test your withdrawal plan against different return scenarios.

### Is SWP suitable for all types of investments?

SWP works best with equity mutual funds, balanced funds, or other growth-oriented investments that can potentially generate higher returns. Fixed-income investments like bonds or FDs can also be used for SWP, but the returns may be lower. Our systematic withdrawal plan calculator can help you evaluate different investment options for your withdrawal strategy.

### How do I calculate the optimal withdrawal amount?

The optimal withdrawal amount depends on your financial needs, expected returns, and desired corpus preservation. A common rule of thumb is the 4% rule - withdrawing 4% of your initial investment annually. However, this should be adjusted based on your specific circumstances and market conditions. Our calculator shows the most you can withdraw each month so that the money lasts exactly the whole period.

### What are the tax implications of SWP?

SWP withdrawals may be subject to capital gains tax depending on the type of investment and holding period. Short-term capital gains are taxed at your income tax rate, while long-term capital gains may have different tax treatment. It's advisable to consult a tax professional for specific guidance. Our systematic withdrawal plan calculator shows pre-tax returns.

## Sources

- Future value of a sum less an annuity, and the annuity payment: S. A. Broverman, Mathematics of Investment and Credit, chapters 2 and 3.
- U.S. Securities and Exchange Commission, Investor.gov compound interest formula. https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator