Financial Calculators
Annuity vs SWP Calculator
Both pay you every month. One keeps your money.
Monthly income under both
₹27,083
- Annuity pays over 20 years
- ₹65,00,000
- Annuity corpus left
- Nil (with insurer)
- SWP pays over 20 years
- ₹65,00,000
- SWP corpus left
- ₹86,81,378
An annuity without return of purchase price pays a fixed amount for life and keeps the corpus; the guarantee is the product. An SWP pays the same amount from a corpus that stays yours, and survives only if the return beats the withdrawal. Annuity income is fully taxable; SWP redemptions are taxed on the gain portion only.
These figures are for illustrative purposes only and are not investment advice. Please consult your investment adviser for investment related advice.
The trade between certainty and ownership
An immediate annuity turns a corpus into a fixed monthly income for life: certain, simple, and gone once purchased, since without return of purchase price the insurer keeps the principal. A systematic withdrawal plan pays the same monthly amount from a corpus that remains yours, invested, and survives as long as its return outpaces the withdrawals. If it does, there is something left; if it does not, the income stops.
This calculator sets the SWP to match the annuity's income and shows what the invested corpus looks like after the period you choose.
Same income, two paths
Annuity income = corpus x annuity rate / 12\nSWP: each month corpus = corpus x (1 + r/12) - income, exact simulation\nReport the SWP corpus remaining, or the month it runs outWorked example: Rs 50,00,000 at a 6.5% annuity rate pays Rs 27,083 a month, Rs 65,00,000 over 20 years, and the corpus stays with the insurer. The same Rs 27,083 drawn by SWP from the corpus invested at 8% pays the same Rs 65,00,000 and leaves Rs 86,81,378 still invested after 20 years.
Frequently asked questions
Then why would anyone buy an annuity?
For the guarantee. The SWP result depends on earning 8% every year; a run of bad years early on can drain it. An annuity pays regardless, for life, which matters more the longer you live and the less other income you have.
How is each taxed?
Annuity income is fully taxable at slab. SWP redemptions are taxed only on the gain in each withdrawal, which in the early years is a small fraction, so the SWP is usually far more tax-efficient.
Can I do both?
Often the best answer: annuitise enough, with the pension, to cover essential expenses for life, and run an SWP on the rest for everything else. NPS requires an annuity on part of the corpus anyway.
What annuity rate should I enter?
The rate an insurer actually quotes for your age and the option you want. Rates without return of purchase price are higher; with return, lower. The default is a round mid-range figure.
Certainty for the essentials, growth for the rest.
We help retirees decide how much to annuitise and how to run the SWP on the balance.