HI:“This money is spread among dozens of mutual funds, ETFs, and index funds,” 
"This money" is only 1M approx.
You don't need "dozens" of instruments to get growth and dividend income especially when there are mutual funds in the mix with no actual stocks.
Amalgamate.

Kids get amazingly expensive if they choose to get higher education and if parents want to help their offspring out, educational finance is better than housing finance(learning how to fish VS fish). 
Barbara hang on to that admin job(even though you may hate the boss) and Bill, good luck finding work with anything less than a  solid 2 or 3 full time college retrain.I don't know what Bills background is so further advice is blind.

Barbara has a DC pension.I would feel better about a DB one but any is far better than none. 

" Even so, he suggests they consider working a few more years to make their retirement more secure."
Truer words have never been spoken.