You didn't say what your expenses are, but I get the impression that your expenses are 100% covered between your pension and your wife's teaching job? You're all set to retire, and should probably plan on stashing away more of your wife's income (to the extent possible), and deferring use of your portfolio, letting it grow until she retires.
Since you're both covered by lifetime defined benefit pensions, which is extremely rare today, you don't really need any investments to produce income.
You are allowed to deliberately over pay your pension by a few thousand a year gaining a locked in 8.25%. I'll have about 87k in that account. It can be distributed 2 ways:
1) Take it out upon separation of service where it will be taxed.
2) It can be turned into an annuity, and 7100 per year is added to my pension.
What a great deal! Definitely take the annuity. You're getting a guaranteed 8.25% return on that money, I assume for the rest of your life. Rough estimate is that on the private market, it would be a little over twice that amount to buy an annuity like that. The only risk factors are what the terms of the annuity are (what happens if you die, does your wife inherit it, is there a guaranteed payout amount), but looks like a really nice feature of your plan.
Do you include your home equity when figuring out how much 4% withdrawal on your investments actually is?
No. You include home equity in your net worth, but not in your income-generating investment portfolio, because your home doesn't generate income.
Do you re-calibrate the 4% number every year?
Generally, no. The 4% number is based on the Trinity study, and in that study the assumption they used was to set the amount at retirement, and only take 4% of that amount per year, plus inflation, regardless of what happened with the investments. Some folks use a modified version of this approach. If you take 4% of current value, you'll never run out, but you could get progressively smaller income from your investments over time. Some folks use a 4% with limits (like, no less than 95% of last year's income) to keep their income within a predictable range.
But in your case, your investments are a small portion of your income:
You: 82k
Annuity: 7k
Teacher estimate: 90k
4% of 360k investment portfolio: 14.4k
You're set for life at this point, enjoy!