SWP: Flexible, Tax-Efficient Mutual Fund Income for Retirement

• A Systematic Withdrawal Plan (SWP) allows regular withdrawals from mutual funds for retirement income, acting as a reverse SIP while the remaining corpus stays invested.
• SWPs offer flexibility, control over withdrawal amounts, no penalties for changes, and potential for corpus growth, making them a flexible way to convert investments into steady post-retirement income.
• A sustainable SWP typically ranges from 5% to 7% annually, with 4% to 5% recommended for a 25-30 year corpus duration, depending on fund type and market conditions.
• Balanced advantage and dynamic asset allocation funds are preferred for SWPs due to smoother returns, while pure equity funds suit younger retirees and conservative hybrids offer a calmer ride.
• SWP taxation applies only to capital gains, not the entire withdrawal, often resulting in a lower tax bill compared to interest income from traditional products.

Why It Matters: SWP offers a flexible, tax-efficient method for steady retirement income.