\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t

Age<\/td>\n\t\t\t

Opening Bal. Corpus at Retirement<\/td>\n\t\t\t

Annual Expenses (assuming inflation @ 6%)<\/td>\n\t\t\t

Expected Annual Return @ 8%<\/td>\n\t\t\t

Closing Bal. of Retirement Corpus<\/td>\n\t\t<\/tr>\n\t\t

60<\/td>\n\t\t\t

2,40,88,060<\/td>\n\t\t\t

9,63,522<\/td>\n\t\t\t

19,27,045<\/td>\n\t\t\t

2,50,51,583<\/td>\n\t\t<\/tr>\n\t\t

65<\/td>\n\t\t\t

2,90,77,256<\/td>\n\t\t\t

12,89,410<\/td>\n\t\t\t

23,26,180<\/td>\n\t\t\t

3,01,14,027<\/td>\n\t\t<\/tr>\n\t\t

70<\/td>\n\t\t\t

3,42,71,786<\/td>\n\t\t\t

17,25,521<\/td>\n\t\t\t

27,41,743<\/td>\n\t\t\t

3,52,88,008<\/td>\n\t\t<\/tr>\n\t\t

75<\/td>\n\t\t\t

3,90,45,491<\/td>\n\t\t\t

23,09,137<\/td>\n\t\t\t

31,23,639<\/td>\n\t\t\t

3,98,59,994<\/td>\n\t\t<\/tr>\n\t\t

80<\/td>\n\t\t\t

4,22,33,958<\/td>\n\t\t\t

30,90,146<\/td>\n\t\t\t

33,78,717<\/td>\n\t\t\t

4,25,22,529<\/td>\n\t\t<\/tr>\n\t\t

85<\/td>\n\t\t\t

4,17,99,250<\/td>\n\t\t\t

41,35,312<\/td>\n\t\t\t

33,43,940<\/td>\n\t\t\t

4,10,07,878<\/td>\n\t\t<\/tr>\n\t\t

90<\/td>\n\t\t\t

3,43,09,325<\/td>\n\t\t\t

55,33,980<\/td>\n\t\t\t

27,44,746<\/td>\n\t\t\t

3,15,20,091<\/td>\n\t\t<\/tr>\n\t\t

95<\/td>\n\t\t\t

1,41,35,724<\/td>\n\t\t\t

74,05,714<\/td>\n\t\t\t

11,30,858<\/td>\n\t\t\t

78,60,868<\/td>\n\t\t<\/tr>\n\t\t

96<\/td>\n\t\t\t

78,60,868<\/td>\n\t\t\t

78,50,057<\/td>\n\t\t\t

6,28,869<\/td>\n\t\t\t

6,39,681<\/td>\n\t\t<\/tr>\n\t\t

97<\/td>\n\t\t\t

6,39,681<\/td>\n\t\t\t

83,21,060<\/td>\n\t\t\t

51,174<\/td>\n\t\t\t

-76,30,204<\/td>\n\t\t<\/tr>\n\t<\/tbody>\n<\/table>\n<\/div>\n<\/center>\n\n\n\n

For illustration purpose only.
(Source: Data collated by PersonalFN Research) <\/p>\n\n\n\n

When you increase the withdrawal rate to 6%, the corpus lasts you even shorter: to be precise till 80 years of age. In other words, the corpus will last 16 years less than had you withdrawn the corpus following the 4% thumb rule.<\/p>\n\n\n\n

Impact of withdrawing at 6%<\/em><\/strong><\/p>\n\n\n\n

\n
\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t
Age<\/td>\n\t\t\t Opening Bal. Corpus at Retirement<\/td>\n\t\t\t Annual Expenses (assuming inflation @ 6%)<\/td>\n\t\t\t Expected Annual Return @ 8%<\/td>\n\t\t\t Closing Bal. of Retirement Corpus<\/td>\n\t\t<\/tr>\n\t\t
60<\/td>\n\t\t\t 2,40,88,060<\/td>\n\t\t\t 14,45,284<\/td>\n\t\t\t 19,27,045<\/td>\n\t\t\t 2,45,69,821<\/td>\n\t\t<\/tr>\n\t\t
65<\/td>\n\t\t\t 2,59,19,248<\/td>\n\t\t\t 19,34,116<\/td>\n\t\t\t 20,73,540<\/td>\n\t\t\t 2,60,58,673<\/td>\n\t\t<\/tr>\n\t\t
70<\/td>\n\t\t\t 2,54,05,511<\/td>\n\t\t\t 25,88,283<\/td>\n\t\t\t 20,32,441<\/td>\n\t\t\t 2,48,49,669<\/td>\n\t\t<\/tr>\n\t\t
75<\/td>\n\t\t\t 2,03,62,512<\/td>\n\t\t\t 34,63,706<\/td>\n\t\t\t 16,29,001<\/td>\n\t\t\t 1,85,27,807<\/td>\n\t\t<\/tr>\n\t\t
80<\/td>\n\t\t\t 72,14,184<\/td>\n\t\t\t 46,35,220<\/td>\n\t\t\t 5,77,135<\/td>\n\t\t\t 31,56,098<\/td>\n\t\t<\/tr>\n\t\t
81<\/td>\n\t\t\t 31,56,098<\/td>\n\t\t\t 49,13,334<\/td>\n\t\t\t 2,52,488<\/td>\n\t\t\t -15,04,748<\/td>\n\t\t<\/tr>\n\t<\/tbody>\n<\/table>\n<\/div>\n<\/center>\n\n\n\n
For illustration purpose only.
(Source: Data collated by PersonalFN Research) <\/p>\n\n\n\n
So, the key takeaway here is that when you withdraw excessively from the retirement corpus, there is a risk of outliving the money needed to meet your retirement expenses. Thus, never commit the mistake of utilising your retirement corpus to make big-ticket purchases, such as expensive jewellery, artefacts, or buying a second home unless you have an ample amount of wealth that ensures a very blissful retirement.<\/p>\n\n\n\n
What are the tax implications of SWP?<\/strong><\/p>\n\n\n\n
From a taxation viewpoint, do note that withdrawal may be subject to capital gains tax.<\/p>\n\n\n\n
The gains on your equity mutual fund investments if withdrawn in the first year are treated as Short Term Capital Gains (STCG) and taxed at 15%. If the investment is redeemed after the first year, the gains are called Long Term Capital Gains (LTCG) and are taxed at 10%, if the gains exceed Rs 1 lakh.<\/p>\n\n\n\n
If you have invested in a debt mutual fund and opted for SWP. The net gains get added to your income and taxed as per your tax slab.<\/p>\n\n\n\n
To conclude:<\/strong><\/p>\n\n\n\n
It is important to carefully plan how will spend your retirement corpus keeping in mind your lifestyle and the accumulated corpus. If you make unplanned lump sum withdrawals, it can have a detrimental effect on your investments. You may end up exhausting your corpus earlier than expected if the rate at which you are withdrawing from your mutual fund plan is higher than the rate at which the scheme’s NAV is growing. Hence, in order to meet your liquidity needs, prefer a disciplined approach by opting for systematic withdrawals.<\/p>\n\n\n\n
Watch this video to know about the four best mutual funds types for planning your retirement:<\/p>\n\n\n\n
<\/iframe><\/center>\n\n\n\n\n<p><\/p>\n\n\n\n<p>This article first appeared on PersonalFN\u00a0<a rel=\"noreferrer noopener\" href=\"https:\/\/www.personalfn.com\/dwl\/Mutual-Funds\/how-retirees-can-wisely-use-the-swp-option-following-the-4-withdrawal-thumb-rule\" target=\"_blank\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>“As in all successful ventures, the foundation of a good retirement is planning.” – Earl Nightingale, American speaker and author. If you plan your retirement well, you will never have to worry about questions such as ‘Will I be able to meet regular expenses after retiring’ and ‘Will my retirement fund last till my last breath?’ When you are nearing retirement,…<\/p>\n","protected":false},"author":5,"featured_media":6450,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/6449"}],"collection":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/comments?post=6449"}],"version-history":[{"count":1,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/6449\/revisions"}],"predecessor-version":[{"id":6451,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/6449\/revisions\/6451"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/6450"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=6449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=6449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=6449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}