How much can you safely withdraw from your investments?

If you're living off your investments, the big question is: how much can you withdraw each year without running out of money? That's your safe withdrawal rate — the bridge between "I have a corpus" and "I have an income for life".

The 4% rule (and an Indian tweak)

A popular guideline says you can withdraw about 4% of your starting corpus in year one, then raise it with inflation each year, and the corpus should last ~30 years. So a ₹1 crore corpus supports roughly ₹4 lakh a year (~₹33,000/month) to start. Run the logic backwards to plan: if you need ₹1 lakh a month (₹12 lakh a year), you're looking at a target corpus of about ₹3 crore at 4%, or ₹3.4 crore at a more conservative 3.5%.

India has higher inflation and higher long-run returns than the US where the rule was born, so many planners suggest a slightly conservative 3.5–4% for a long retirement — especially if it must stretch past 30 years.

A worked example

Take a ₹2 crore corpus at age 60. At 4% you draw ₹8 lakh in year one, stepping up ~6% annually for inflation — ₹8.5 lakh in year two, ₹9 lakh in year three, and so on. If the corpus (say 50% equity, 50% debt) averages 9-10% while inflation runs 6%, the maths generally holds for three decades. But averages hide the danger: the order of returns matters as much as the average.

The biggest risk: poor timing

If markets crash early in your withdrawal phase, you sell more units cheap and the corpus can deplete fast (sequence-of-returns risk). A −30% first year followed by recoveries hurts far more than the same crash in year fifteen, because your early withdrawals ate the units that would have recovered. Defences:

• Keep 2–3 years of expenses in debt/liquid funds as a buffer, so bad years never force equity sales.
• Withdraw via an SWP from a balanced mix, not all equity.
• Trim withdrawals in bad years if you can — even a 10% cut during a crash meaningfully extends corpus life.

Common mistakes

Ignoring inflation is the classic one — ₹50,000 a month feels ample today and threadbare in fifteen years at 6% inflation. Others: treating the 4% figure as a guarantee rather than a historical guideline, holding zero equity (the corpus then loses to inflation even without withdrawals), and forgetting tax — SWP withdrawals from equity funds incur capital-gains tax on the gain portion, so plan on post-tax income (see how funds are taxed). None of this is a substitute for personal advice; a SEBI-registered adviser can model your exact case.

→ Test how long a corpus lasts at different rates in the SWP calculator.