how to do this,
1) Don't listen to those who are telling you not to pay for your children's college. For all we know, this is a long-lasting promise you made to them or something you or your ex really want to do. I take that as a given.
2) Good Lord, you can EASILY do this.
3) With $700,000 already, plus your contributions over the next 7 years (I just did 7 years, not 8), that money at just 5% gain annually will be worth $1,243,671.97 when you are 60. Do NOT touch that money at age 60. Start withdrawing at age 62 (I will give final totals later).
4) You will fund your children's education with your income over the next few years, so this is just an expense (like paying for electricity), so you need to budget for that, but it will not go into my calculations.
5) Regarding the house, if you want to leave the area, do that, or if you want to stay in same area but with smaller cheaper house, do that. If you want to stay in that house, re-consider. Is your house too big for a dude about to have all children gone? I am going to assume a sale in 8 years. With Realtor fees and moving expenses, I will still keep your net gain from sale at $380,000. I will take off $140,000 for amount you likely still owe on it by then. That leaves $240,000. Go find a nice $180,000 house somewhere. Buy it. Bank $60,000.
Sample $180,000 homes from around the country:
Surprise, AZ -
http://www.realtor.com/realestateandhomes-detail/15944-W-Quail-Creek-Ln_Surprise_AZ_85374_M21520-32352
Grand Junction, CO -
http://www.realtor.com/realestateandhomes-detail/473-Duffy-Dr_Grand-Junction_CO_81504_M26527-37615
Clearwater, FL -
http://www.realtor.com/realestateandhomes-detail/1581-Lotus-Path_Clearwater_FL_33756_M65623-97543#photo0
Austin, TX -
http://www.realtor.com/realestateandhomes-detail/7111-Thannas-Way_Austin_TX_78744_M70558-40375
Carmel, IN -
http://www.realtor.com/realestateandhomes-detail/501-Walbridge-St_Carmel_IN_46032_M41310-09041
Bellingham, WA -
http://www.realtor.com/realestateandhomes-detail/17-Little-Strawberry-Ln_Bellingham_WA_98229_M15308-28319
6) So, at this point you have no mortgage and $60,000 from the proceeds of the sale of your house. You also have $190,000 extra in utilities and emergency fund (you should sell those utilities -- too risky for a retired person -- should go in diversified mutual funds).
7) Now, retire at age 60. Spend $180,000 of your money listed in #6 above over 3 years to live on leaving you with $70,000 emergency fund. You are now 63, and your 401k money is now worth $1,439,705.77 at still the paltry gain of 5% annually.
8) Take 4% of the $1,439,705.77 and that is $57,588.23, so that right there is almost enough. Honestly, with zero debt and kids gone, you COULD live on that if you wanted to, so retirement is ALREADY a possibility. BUT, you now get to add Social Security, and at age 63, you will get $30,612 based on a current salary of $80,000 (just a conservative guess). So, now you are up to $88,200.23. If you can't live on that with zero kids around and a paid for house, then you've got problems.
Make it happen, brother.