RetirementFinancial Glossary
Safe Withdrawal Rate (SWR)
Definition
The percentage of your retirement corpus you can withdraw annually without running out of money over a specified period (typically 30 years). The globally cited 4% rule (Trinity Study) suggests withdrawing 4% of your initial corpus, adjusted for inflation each year. For India, financial planners often recommend 3-3.5% due to higher inflation.
Why It Matters
Your safe withdrawal rate directly determines the retirement corpus you need. At 4% SWR, you need 25x annual expenses. At 3% SWR, you need 33x annual expenses. For an annual expense of Rs 12 lakh, this is the difference between needing Rs 3 crore and Rs 4 crore. The lower Indian SWR accounts for 6-7% inflation (vs 2-3% in the US) and longer potential retirement periods.