Thanks for all the fast replies! I was hoping the clickbaity title would generate some interest :)
ixtap: There is always a way to spend all your money, but for the particular scenario of long term care, parents have dividend income, pension, and social security to comfortably afford long term care for two forever.
Here's a far fetch idea. If you are confident enough in including your future inheritance to your FIRE plans, meaning you know your parent won't need it and that they will give it to you. Why don't you ask them to start gifting you the money yearly so you don't run the risk of something happening to it? You and your spouse can get up to $56K a year from your parents tax free. That way you can actually spend it now vs waiting until they pass.
I know it's crass, but again if you don't feel comfortable asking them to do this then I think that answers your question on if you can count your possible future inheritance in your FIRE plans.
mxt0133: This was an excellent thought experiment. The answer is no way would I ever ask my parents for money for anything. Even to do the spendy travel/experiences they want to do with us. We pay our own way or we don't do it. So what happens if I start counting any of their money as mine at any future time? Is there an undesirable attitude shift? If Dad dies and Mom finds a young spendy new husband can I still say awesome, congrats, I support all choices you make to increase your happiness? If there is even a chance of hurting excellent family relationships, using a future inheritance to justify increased current spending is a bad call.
Dragonswan: The trust is revocable until one parent dies. The idea was generally can we avoid an eternal cycle of OMY by using the high probability of an inheritance to sleep better at night. The more I fret over possibly altering the family dynamic, the more I end up back at Frankies Girl's advice:
Should you count on an inheritance in your FIRE budget? No. Period, full stop.
Frankies Girl: totally a response I would write to this post. Generally, we don't have big desires to spend more money. We are as a rule pretty terrible at spending money. Our innate desire to have and hoard money tends to win out very easily over our desire for more stuff and experiences. Hence it can seem useful to use the probability of an inheritance to encourage early retirement since we can most likely afford it any way.
Is your SWR based on the expected $1M?
No, just based on savings to date.
Are you OK with the higher WR when you don't get that $1M?
No, we are generally not comfortable with a 3.5% withdrawal rate (given current market conditions).
Its interesting how you could be so sure of the inheritance. Your parents can't even know they'll have a dime left...much less that you'll get that dime. Unless you believe nothing can change in 30 years....
https://www.youtube.com/watch?v=EeOUty4SWvI not a serious response but your last point made me think of Chris Rock's line about how wealth is passed down from generation to generation and cannot be gotten rid of. Although based on their historical track record, it would be tough for Mom and Dad to spend everything, it is always possible. The idea was more can you add a 98% success rate for a FIRE plan to a 50% chance at an inheritance to get to a 99.99% FIRE plan.
Hrdlee: Good note. Longevity runs on both sides of the family. Hope your Dad stays healthy for years to come.
PizzaSteve: That is roughly where we are at. Trying to have a plan that holds in all sorts of contingencies. For now the plan is 3 more years of work so that we are covered with: (1) no ACA subsidies, (2) the worst historical sequence of returns (Jan. 1966 or Sept 1929), (3) no inheritance, and (4) a 25% reduction in social security benefits. For now I think Anxiety wins, but that still means retirement by 40. Not too shabby for an overly paranoid couple.
secondcor521: Potential resentment is the idea that is the most concerning. Even if the risk of hurting valued relationships is low, it is not an acceptable risk to take. On your second point, wonderful but paranoid Mom mostly took care of the issue of a second spouse in the current trust. Despite being the odds on favorite to live the longest, she has a deep and abiding fear that some young trollop will be wearing her jewelry and spending her money after she dies.