Our question is, what dollar amount should she feel comfortable going PRN at? I think the reason we liked the idea of paying off the mortgage because it was a solid goal we could reach and then say "okay, you can work less now", but with investments, it seems a little more arbitrary as to when she could stop (at which point we would have our 2nd baby). After considering it, it does make sense to put all that money into investments instead. Anyone have any idea as to what a good goal should be, dollar amount or years? We can keep investing once she goes PRN, but the bulk of our income ($5500 per month) is her, so that would drastically decrease. We would also have to put health insurance on my plan when she goes PRN which would -$400 extra a month from my income, although by then I will have a raise that will probably offset that cost.

I can't tell you a specific dollar amount, because there are too many unknowns (like the value of your pension), but here are some rules of thumb:

You need @25x your annual expenses in investments (i.e., not including cash/EF) in order to live forever off of your 'stache per the 4% rule. For you, that means @$2200x12x25 (assuming expenses don't rise with kids, lifestyle inflation, etc.) = $660K. If you want to make an estimate of your pension, you would just knock that off the annual total before you multiply by 25 -- so if your expenses are $2200 and you think you will get a pension of $1000/mo, your net expenses are $1200/mo, meaning that you would need a 'stache of $360K to fill the gap.

The other "rule" is the rule of 72, which tells you how long your money takes to double -- basically, the interest rate multiplied by the time equals 72. So if you assume your money will make 6%, then it will take 12 years to double; at 7%, it takes 10 years; etc.

In other words, if you want to be able to FIRE in 20 years, and you think that you will have a $1K/mo pension, your "target" is $360K in 20 years. But if you think that you will get 6% returns, that means in 8 years you need to have $180K saved, because that $180K should double by the time you hit 20 years -- without you saving another cent!

So what I would recommend is plug all of this into a spreadsheet, with your own assumptions and your own numbers. Say you want to have another kid in 3 years: what figure do you need to have saved by then for your 'stache to grow to $360k over the remaining 17? Or do it the other way and plug in the amount you plan to save per month, and see how long that will take to get to the amount that will grow on its own to your target after 20 years.

Of course, once she quits, you can still continue to save off of your income alone. :-) But the beauty of this approach is that you don't actually need to rely on that to be FIREd by the time your pension kicks in.

Also, I would get the IRA out of WF. Transfer it to Vanguard, throw it in VTSMX, and let it ride -- the Vanguard people will walk you through this (it's just a matter of sending forms asking for a direct transfer from one account to the next -- the only key is do NOT let WF write you a check).