Systematic withdrawal plans

Systematic Withdrawal Plans (also known as SWPs) have become increasingly popular for those looking for a consistent cash flow stream from their investments.

SWPs are particularly attractive for individuals who do not have a fixed government and/or company pension plan available as retirement income, since they must rely on their own savings to provide them with the cash flow needed for retirement.

A common method of setting up a SWP is to invest a lump sum of money into a good quality mutual fund outside of a registered plan, and then withdraw a fixed dollar amount on a periodic basis (usually monthly) to meet cash flow needs.

The amount of the systematic withdrawals can be changed at any time to suit your cash flow needs and hence provide greater control and flexibility over your financial situation. In fact, if planned properly, the earnings on the capital each year can be greater than the amount withdrawn, thereby allowing the investment account to continue to grow while still meeting your cash flow needs.