Based on the information and my assumption, they can retire!

To achive this, they need to turn their assets to income producing asset.  They are very house rich and cash poor.  They need to reallocate their investments.

$1.6M in 401(k) is not being touched and can't be withdrawn until 59.5 or 55 if they follow IRS 55 withdrawal rule.

$1.4M rental property only produces $30K return which is only meager 2%, that is terrible investment in terms of income producing.  It might not be a bad investment from house appreciation point of view.  Based on 4% rule, $1.4M can easily produce $56K annually if it is allocated 50% in stock market and 50% in bond market.

$2M in primary residence and stocks.  If I assume that the stock portion is $1M, then it can produce $40K.  We don't count $1M primary residence since it is not income producing asset.

$56K + $40K = $96K which is 80% of current income.  Good luck.