My wife is of the opinion that we should hold it even at a slight loss if we can eventually see a 20-40K increase on sale price. It's had a hard time recovering from 2009 - we paid $40k more than it's now worth.
This is classic "sunk cost fallacy."
https://en.wikipedia.org/wiki/Sunk_costsWhat your house is worth today has nothing to do with what you paid for it. The question to ask yourself is, if I could buy it today for (whatever you could sell it for), would I rather have the property or the cash? From your description, it sounds like the answer is cash. Since you have a HELOC loan against the property, you will need to come up with some cash to dispose of the property. Figure out how much underwater you are, save up the cash for closing or use your taxable investment dollars, and get rid of it.
401k: We contribute about 14%. Haven't maxed out yearly yet.
529: $300/month
non tax deferred: $200/month
You should take the money you're putting into your taxable account and 529 and push that over to the 401k until you hit 18k a year in contributions for each of you. 14% of 145k is about 20k, the $500 a month is 6k, so you need to come up with another $10k a year in 401 contributions. When you do that, then start up 529 contributions, then taxable savings. Remember that contributions to your 401k will cost you only 75 cents on the dollar, if you're in the 25% bracket. Consider raising your withholding to soften the blow.
How can I somewhat accurately estimate what we will need to spend yearly at 45 or 50 years old?
Create a budget based on what you're doing today. Will anything change in 15 years? Will your commuting costs, housing costs go down? What are your plans for supporting your kid in college? Go through the budget and see what you can trim out.
How am I doing?
The inheritance gave you a huge leg up, you're at roughly 550k today (using cash equivalent for the annuity). If you save 36k a year, in 15 years, with a 7% real rate of return you'll have $2.8m. In 15 years, that $2.8m after inflation will have the purchasing power of roughly $1.75m in 2015 dollars. That will generate an annual income of about $70k in today's dollars.
So, probably not enough to retire given your current lifestyle. Spend less, make more, or work longer and you can get there. Increase your earning over the next 15 years and keep your lifestyle the same, and you can probably get there.