When we think about retirement, we think of a where we get a regular monthly income to meet our daily expenses; where we don’t have to depend on others’ money; where we can say confidently that we have the financial freedom even at this age. If you retire at 60, you estimate to receive monthly pension for years so that your rest of life is spent peacefully. There are many ways to get this monthly pension. One of the effective ways is systematic withdrawal plan. In SWP, you invest a lump sum amount in a mutual fund(s) and get monthly pension from its returns. If you plan your SWP in a way where your monthly pension is lower than your returns on investment, not only you can get a lifelong pension, but also your balance amount after withdrawing pension can be the same as your principal, or in cases, even bigger after that. We will tell you a calculation, where, if your principal invested is Rs 1 crore, and you take a monthly pension of Rs 41,667 for 16 consecutive years, your balance remains Rs 1 crore. But before that know how SWP works-

What is SWP?
When you invest in a mutual fund, you purchase NAVs. In a SWP plan, the fund house sell NAVs of a particular amount and give the investors monthly pension. If the market is performing poorly and the rate of NAV is low, the fund house will sell more NAVs, if the rate of the NAV is high, it will sell less. But it will give the investor a fixed amount every month.
“In an SWP, there are few key decisions to make. The first is how many years you want the pension to last. The second is at what  yield you want it to last. Ideally pay yourself a good pension up to the age of 75-80 years of age. So, if you retire at 60, then the pension should pay you for another 15-20 years and you should structure the SWP accordingly,” said Nehal Mota, Co-Founder & CEO, Finnovate. 

Won’t one’s investment deplete after taking regular pension?
It will deplete if the rate of withdrawal is more than the rate of return. So, the ideal situation is that you keep the rate of withdrawal much lower than your returns. E.g. if the rate of return is 10 per cent annual, then your rate of withdrawal can be 6 to 7 per cent. Also, is it better to stay away from mutual fund investments where returns are in negative and your money is stuck.
“You cannot take risk with that money, so equity is virtually ruled out. Even in debt, it should be debt that has low levels of default and interest risk. Which is why, liquid funds or money market funds would be the best choice and you should target returns of around 5% at a conservative level. Anything above that is icing on the cake,” says Nehal. 

How to get over Rs 41 K monthly pension without depleting invested amount?
If you want to get Rs 41,667 monthly pension for 16 years and wants to have same balance as your principal after all those years, you need to invest a lump sum amount of Rs 1 crore. As per expert calculation, even if you get a five per cent return on that invested amount, you can withdraw Rs 41,667 pension for 16 years. After that period you will still be left with Rs 1 crore corpus. It happens because the withdrawal amount is less than the returns. 
In secod scenario, you can have Rs 75,000 monthly pension for 16 years with Rs 1 crore investment. However, after 16 years, you will be left only with a balance amount of Rs Rs53,366.