SWP: How you can get Rs 1 lakh monthly pension for 25 years and still get your entire investment amount back

Mutual Fund calculator: Financial planning, especially retirement planning, is necessary in order to receive enough funds to sustain and maintain the same lifestyle after hanging one's boots. In order to retire wealthy, one must plan and invest in order to receive regular monthly income for expenses after retirement. Although the required amount differs from person to person, but if Rs 1 lakh per month is your desired amount, then here's how much one would have to invest in order to receive it monthly after retirement. 

The calculation below shows how one can receive Rs 1 lakh per month upon retirement, for a duration of 25 years. And, as an added bonus, the principal amount will also remain untouched and be returned upon completion of 25 years.

This can be achieved through mutual fund SWP.

Systematic Withdrawal Plan: What is Mutual Fund SWP?

A Systematic Withdrawal Plan (SWP) is a financial tool intricately woven into the world of mutual funds. It empowers investors, especially those in their retirement years, to regularly withdraw a predetermined sum from their mutual fund investments. In essence, SWPs provide retirees with a financial cushion akin to a monthly paycheque, ensuring financial stability without the hassle of actively managing an investment portfolio.

How is SWP the best option for retirees?

The best thing about SWP is that it promises regular income. One can also customise the withdrawal amount, frequency, and duration. Moreover, the rest of the corpus keeps growing in SWP.

Talking about taxation, depending on the duration of your investment, gains from SWPs can be classified as either short-term or long-term capital gains. Typically, long-term gains enjoy more favourable tax rates, leaving investors with more substantial returns.

Experts say SWP is generally more suitable for retirees, as it provides a regular income stream to meet their living expenses. Conversely, SIP is more appropriate for individuals who are still accumulating wealth and don't require immediate withdrawals.

Calculation of getting Rs 1 lakh/month at retirement for 25 years
As per the mutual fund calculator, in order to receive Rs 1 lakh per month for 25 years after retiring, one must invest a corpus of Rs 1,51,00,000 upon retirement — assuming an annualised return of 8 per cent. Check the complete calculation below —

Investment - 
One-time invested amount: Rs 1,51,00,000
Assumed annualised return: 8 per cent.

Return-
Monthly pay-out: Rs 1,00,000
Balance remaining: Rs 1,51,00,000

Total pension withdrawn- 
Annually: Rs 1,00,000 x 12 = Rs 12,00,000 
Over 25 years: Rs 12,00,000 x 25 = Rs 3,00,00,000

Total earning-
Balance + total pension withdrawn = Rs 4,51,00,000

At Rs 1,00,000 per month, your total pension earned over 25 years will be Rs 3 crore. The balance amount will remain the same — Rs 1,51,00,000, and in total you will receive Rs 4 crore 51 lakh as return.