A rising withdrawal, read in today’s money

Choose a starting withdrawal, how much it rises every year, and the inflation you expect. The calculator shows how long the corpus lasts and what each year’s withdrawal and the balance left are worth in today’s money — so you can see whether the step-up keeps pace with prices.

Your numbers

Change anything; the result updates as you type.

Result

An income that keeps pace with prices asks the most of the return underneath it.

A withdrawal that rises every year leaves less and less to compound. MindForge publishes the backtest behind each of its three strategies, and the two paid ones trade in their own broker-verified Zerodha accounts — the kind of evidence a withdrawal assumption deserves.

See the strategies

How the plan is modelled

The first year pays the withdrawal you enter, every month, and every twelve months it rises by the step-up. Each month the balance first grows by one twelfth of the annual return, then the withdrawal is taken out; if the balance cannot cover it, what is left is paid and the plan ends there. Separately, every figure from year y is divided by (1 + inflation) for each year that has passed, to show what it would buy today.

withdrawal in year y = start × (1 + step-up)^{y − 1} · in today’s money = amount ÷ (1 + inflation)^{years passed}

Does the step-up keep pace?

At the defaults — ₹1 crore at 9%, starting at ₹50,000 a month and rising 5% a year for twenty years — the last year’s withdrawal is ₹1,26,348 a month. At 6% inflation that buys what ₹41,759 buys today, 16.5% less than the first year, because the step-up is a point below inflation. Set the step-up equal to inflation and every year’s withdrawal buys the same.

Why a flat SWP flatters you

Take ₹50,000 a month from ₹1 crore at 9% for 25 years. Never raised, the withdrawal leaves ₹3,80,28,048 invested at the end. Raised 6% a year to keep up with 6% inflation, the same plan runs out after 24 years and 9 months, because by year 25 the withdrawal is ₹2,02,447 a month. The flat plan is not wrong arithmetic — it is an income that buys about a quarter as much by the end.

What this model does not capture

Sequence risk. A fall in the early years, while the withdrawal keeps rising, does far more damage than the constant return here suggests.
A steady inflation rate. Prices do not rise by the same percentage every year, and a few years of high inflation early in the plan lower what every later withdrawal buys.
Tax. Each withdrawal from a mutual fund is a redemption, and the gain portion is taxable. The figures here are before tax.

Questions

How is this different from the step-up SWP calculator?

Both raise the withdrawal by a step-up you choose every year. This one also takes an inflation rate and shows each year's withdrawal and the balance in today's money, so you can see whether the step-up keeps pace with prices.

What step-up keeps the income's buying power?

One equal to inflation. A lower step-up lets each year's withdrawal buy a little less than the year before; a higher one buys more and runs the corpus down faster.

What does the highest starting withdrawal mean?

The largest first-year monthly amount that, raised by your step-up every year, lasts exactly the full period at the return you entered. It assumes that return arrives every month without fail, so treat it as a ceiling, not a target.

Which inflation rate should I use?

A long-run rate for your own spending rather than last month's figure. Costs such as school fees and healthcare have often risen faster than the overall index, so a rate a point or two above it is a common, cautious choice.

Is tax included?

No. Each withdrawal from a mutual fund is a redemption, and the gain in it is taxable, so the income you keep is lower than the amounts shown.

Other calculators

Fee Calculator What a percentage-of-AUM fee costs against a flat subscription. Step-Up SWP Calculator A withdrawal that rises every year, and how long the corpus lasts. SWP Calculator What a monthly withdrawal does to a corpus, and how long it lasts. Retirement Calculator The corpus your expenses need, and the monthly SIP that builds it. Inflation Calculator What something will cost in future, and what a future sum is worth today. Goal SIP Calculator The monthly SIP a target needs, with the goal inflated to its future cost. FD Calculator A fixed deposit’s maturity, and what it earns after tax and inflation. All 16 calculators Grouped by the question each one answers.