SWP Pitfalls: Why Your Retirement Plan Might Be At Risk

• "Safe" SWP withdrawal percentages aren't permanent guarantees; they depend on market returns, inflation, and asset mix, with timing being crucial in withdrawal years.
• Starting SWP during market downturns can severely deplete the portfolio early on, as more units are sold at lower prices, impacting long-term recovery.
• Increasing SWP amounts annually for inflation without assessing portfolio capacity can lead to capital erosion, especially during periods of muted returns.
• Using a growth-focused portfolio for income generation is risky; portfolios need to be re-shaped for the withdrawal phase, balancing equity and debt.
• SWPs require flexibility, regular review, and a buffer for unexpected expenses, rather than being treated as a rigid, set-and-forget instruction.

Why It Matters: SWP success demands flexibility, regular review, and adaptation to market realities, not rigid adherence to initial rules.