Q. The retirement income tables I see say you need 85 percent, or less, of your salary in order to retire with enough money to maintain your standard of living. My question: Is that net or gross income? Surely it is net, because it seems that gross that would give you way more retirement income than you need. But since I don’t know exactly how those retirement calculators work, I am confused.

For example, my take home pay is $72,000 a year, so in retirement my need would be about $61,200. But my actual salary is $122,000 (with 85 percent being $103,700). I recently plugged all my info into the Wells Fargo Retirement calculator, but used my annual salary figure. But shouldn’t I use my take home salary? ---K.L, from Dallas, TX

A. Virtually all retirement calculators are based on a percentage of your gross income. It’s a reasonable convention for institutions figuring how much of earned income a pension will replace. The Social Security Trustees also use this convention.

But it misses the boat in real life. The convention works to exaggerate your need to save because we will never need that high a percentage of income to spend in retirement. The income you need to replace is what you have to spend after employment taxes, savings, most debt service, the cost of working, and the cost of raising and educating children. That’s a lot less than 85 percent. For most workers, a more realistic measure is closer to 70 percent of pre-retirement pay, often less.

For the financial services industry, which provides most of the retirement calculators, the convention works as nicely as a butchers thumb on the meat scale--- it overstates the amount we need to save to have a secure retirement.

Q. I am 65; healthy and teaching full time in a high school. I would like to teach at least 3 more years. My wife is 57 and a registered nurse. Our joint income is about $160,000 a year. Our mortgage balance is $140,000 on a $325,000 home.

In 2005 we refinanced at 4.25 percent, paid a good part of our daughter’s college education and completed a major remodel. We have a $16,000 car loan and credit card debt of $14,000.

My wife wants to remodel the rest of the house--- bathrooms, windows and so on. Our contractor estimate is $50,000. Our bank is willing to give us a 15-year refinance at 3 percent, adding $50,000 to our balance and increasing our monthly payment from $785 to about $1,300. We have been working hard to pay down debt.

I am almost convinced to go for it because of the 15-year mortgage. We can make the higher mortgage payment. Should we go for the 15-year and draw equity for the remodel? Forget the remodel? Use a home equity line of credit? I am eight years older than my wife, so I am hesitating to add debt. ---M. J., Tacoma, WA

A. What you should do depends on some core questions. Having a renewed mortgage that will last 15 years means you’ll be paying on a mortgage until you are 80 years old. If you add that $1,300 a month to the ongoing costs of operating your house, how much of your retirement income will go to the cost of shelter? Today, you easily qualify, with ample income. But how will it look when you are both retired?

Another question is how long you intend to live in the house. If the remodel is part of a carefully considered “age in place” plan, then you’re probably making a good investment. If you’re thinking about moving when you both retire, you might wait because money spent on remodels may not be recovered when the house is sold.

Finally, will the additional monthly cost of the remodel— $515 a month— give you greater pleasure than something else you would both like to do? We spend a lot of time in our homes, so the answer for most people will be “let’s go for it!”— But it’s an important question to ask.

In the end this is more personal than financial. My wife and I, for instance, are house nuts. We’ve done major remodels on six houses in the last 25 years. We’ve never regretted it, but we’ve been very careful not to get carried away.