SIP+SWP For Retirement Planning: Rs 14,000 monthly SIP investment for 20 years, then Rs 1,07,500 monthly income for 20 years; learn all about it

You can combine SIP and SWP for a steady income. Invest a fixed amount regularly through SIP and withdraw a fixed amount at regular intervals through SWP. This way, you'll get a regular income for years to meet your needs. 

Anamika Singh | Jan 30, 2025, 12:08 PM IST

SIP (Systematic Investment Plan) and SWP (Systematic Withdrawal Plan) are two smart ways to plan for retirement. SIP helps you save for retirement by investing small amounts regularly in mutual funds. Over time, your money grows and becomes a sizeable corpus. SWP, on the other hand, helps you use that corpus during retirement. It gives you a steady monthly income while keeping the rest of the money safe for future needs. 

Photos source: Pixabay/Representational

(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)

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What is SWP?

What is SWP?

Systematic Withdrawal Plan (SWP) is a way to take out a fixed amount of money from your investment at regular intervals. It's often used in retirement to get a steady income. Here's the best part: even as you withdraw money, your investment continues to grow. If your investment grows faster than you withdraw money, you can keep getting money for many years, even decades.

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Systematic Withdrawal Plan

Systematic Withdrawal Plan

SWPs offer flexibility in withdrawal amounts, individuals can set up SWP in equity, hybrid, or debt mutual funds, but it is good to start SWP in a fund with the least exposure to the market, e.g., a debt fund or a conservative hybrid fund. 

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Rupee cost averaging with SWP

Rupee cost averaging with SWP

SWP also helps you save money by averaging out market ups and downs. When the market is high, you sell fewer units (NAVs). When the market is low, you sell more units. This way, you get a fair price overall and reduce losses.

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What are benefits of SWP?

What are benefits of SWP?

Flexible withdrawal option
Emergency fund alternative
Regular inflow of funds

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What is SIP?

What is SIP?

In a systematic investment plan, you can invest a fixed amount that remains the same throughout the period. Investors can invest daily, weekly, monthly, half-yearly, or yearly in it, with a minimum amount of Rs 100.

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How SIP and SWP work for retirement planning

How SIP and SWP work for retirement planning

The first step is building a retirement corpus through SIP. Once the corpus is built, it can be withdrawn in the form of monthly income through SWP. There is an advantage in withdrawing through SWP, investor can witness growth in their corpus while withdrawing it. Individuals can also increase or decrease their withdrawal amount as per their requirements.

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SIP calculations

SIP calculations

We will be calculating on Rs 10,000 monthly SIP investment for 20 years. 

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Rate of SIP return

Rate of SIP return

We will calculate at 12 per cent annualised rate.

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What will be your retirement corpus in 20 years?

What will be your retirement corpus in 20 years?

The investment amount will be Rs 33,60,000, the estimated capital gains will be Rs 1,06,28,071, and the estimated retirement corpus will be Rs 1,39,88,071.

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What to do after building a retirement corpus?

What to do after building a retirement corpus?

Investors need to invest the same amount in a mutual fund and start SWP after building a retirement corpus.

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What will be the monthly income from SWP?

What will be the monthly income from SWP?

The monthly income from the systematic withdrawal plan (SWP) will be Rs 1,07,500. 

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SWP calculations at 7 per cent annual return

SWP calculations at 7 per cent annual return

We will take Rs 1,39,88,071 retirement corpus for investment of 20 years. 

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What will be the balance after 20 years?

What will be the balance after 20 years?

The total withdrawn pension in 20 years will be Rs 2,77,20,000 at 7 per cent annual return, and the remaining balance after withdrawing this amount will be Rs 1,67,885.

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