This article is part of the Biblically-Informed Framework for Retirement Stewardship. It was initially published in March 2017 but was updated in January 2026.
This article is the second in a four-part series on the most important steps to take at different stages of life to retire with dignity.
This time, I’m focusing on those in their mid-30s and 40s. Some may call them the “Gen Xers”—those caught between millennials and baby boomers.
Although many baby boomers are ill-prepared to retire with dignity, and millennials are just getting started, according to an article on Bloomberg.com,
Gen Xers are in even worse shape financially than the baby boomers who preceded them or the millennials who followed… Gen Xers are still paying off student loans while raising families on wages that have barely budged in recent years. They have more debt than other age groups and are more pessimistic about ever being able to afford to retire, according to many surveys.
Understanding the three principles framework
Before we dive into the specific priority for your age, let’s briefly review the Biblical Framework for Retirement Stewardship, which rests on three foundational principles:
Self-Sustaining Principle: Planning wisely so you don’t burden family, church, or society with expenses you could have prepared for.
Caregiving Principle: Preparing to both give care (to aging parents) and eventually receive care yourself.
Ministry Principle: Continuing to bear fruit and serve God’s purposes in every season of life.
This article focuses on the Self-Sustaining Principle—specifically, eliminating debt so you can save adequately for retirement. However, your 30s and 40s are also critical years for the Caregiving Principle: You may be caring for young children while also beginning to think about aging parents’ needs. This is the time to create comprehensive estate documents (wills, powers of attorney, healthcare directives) and have initial conversations with parents about their long-term care plans. Regarding the Ministry Principle, this is often the busiest season of life, but finding ways to serve in your church and give generously—even amid financial pressure—establishes patterns that will shape your entire life. For the complete framework, see Biblical Framework for Retirement Stewardship.
Now let’s focus on what matters most financially during this stage: getting out of debt.
The challenge of this life stage
It may be challenging, but this period of life can also be fun and fulfilling. You’ve been in the workforce for a while now (hopefully) and may be progressing in your career. You are probably married and have some children. You may be actively serving in your church and involved in many family activities. You may even be homeschooling. The pace is fast, your life is full, and your expenses have probably increased significantly since your 20s and early 30s.
If you’re at this stage of life and haven’t done what I recommended in the first article in this series for those in their 20s and 30s, i.e., to start saving, you have some catching up to do. But if you find yourself with a lot of debt, you may need to postpone saving for a while longer.
Perhaps you’ve been saving since your 20s, but you know you need to be saving more. If you’ve also accumulated debt, you may need to pause or reduce your savings to focus on paying it off. You will still have some savings to make up, but it won’t be as much as if you hadn’t been saving.
The primary goal of retirement stewardship in this stage of life is to save regularly while keeping debt to a minimum, ideally just an affordable mortgage. (Of course, you will want to pay that off one day, too.) Carrying too much debt will prevent you from saving when it matters most. It can also prevent you from giving as generously as you would like.
Avoid debt in the first place
The Bible appears to teach that while lending is a blessing, borrowing is discouraged. One verse (Proverbs 22:7) describes debt as “slavery.” In biblical times, taking on debt may have been necessary for survival. But life for debtors was hard, particularly those who had trouble paying. Nowadays, it’s often more about financing our wants than our needs. A more modern interpretation of this verse may mean that indebtedness, especially when we owe more than we can pay, puts us in bondage to our creditors and constrains what we can do with our money. So, it’s best to avoid it if at all possible. If we must borrow, such as a mortgage for a home, we should repay it as soon as possible.
The best way to avoid getting into debt in the first place is to maintain an emergency fund of at least three to six months of expenses, avoid using credit cards unless you are sure you can pay them off every month, and avoid spending too much (and borrowing too much) for things like a new house or a new car.
From a retirement stewardship perspective, houses and cars can be potentially financially crippling expenses. If too much of your net income (take-home pay) is going for these high-ticket items, or you are carrying too much unsecured debt, you may be unable to save enough for retirement.
A new, larger house comes with a bigger mortgage, more property taxes, and steeper maintenance costs. New cars typically come with high monthly payments over a long period. If you pay and then borrow too much for them, putting too much stress on your budget, you risk jeopardizing your ability to retire with dignity. For some guidance on making wise decisions in these areas, see these past articles about major purchases: Your House Purchase Decision and Your Car Purchase Decision.
Even if you’ve tried to be careful, you may have built up some consumer debt (credit cards, car payments, etc.), and perhaps a first (and second) mortgage. You may also have an old student loan that is still hanging around like an unwanted relative. If so, now is the time to take action.
Debt is still a major problem
When it comes to debt, our financial system makes it very easy to obtain credit and defer repayment. Our consumer-oriented culture promotes a reality that expects and demands expensive purchases, frequent turnovers of pricey items, and perceived necessities that may not be so necessary. It is easy to take a shortsighted view of your personal finances and make mistakes that could significantly impact your retirement.
According to recent Federal Reserve data, household debt remains at historically high levels. While mortgage debt has moderated somewhat, automobile and student loans remain significant burdens. Credit card debt has also reached new highs as inflation and rising cost of living have strained household budgets.
A 2015 study by the Urban Institute found that consumers in their 30s and 40s carry the highest debt burden of any age group, peaking between ages 38 and 52. As shown in the chart below, it peaks between ages 43 and 47.
Your 30s and 40s are a time to keep your retirement savings on track; if you started late, you may need to ramp up your contributions. Debt can significantly constrain your ability to save as much as you need to. A bad scenario is one in which your debt payments and living expenses equal or exceed your income, leaving you unable to save. If you find yourself in that situation, you need to make some changes.
Let’s do some math
If you get out of debt and stay out, two good things happen. First, you will have more discretionary income to spend, give, or save. Second, if you stay out of debt and perhaps pay off your house mortgage before retirement, your expenses will be less when you retire. In that case, you may need fewer savings to generate the income you need to meet your expenses.
Let’s say you’re paying $200 (principal plus interest) per month on credit card debt, $200 per month on a student loan, and $350 per month on an auto loan. Those payments would total $750 per month. If you paid off all those loans and increased your monthly savings for retirement by the same amount starting at age 40 and earned 5% per year compounded annually until age 65, you would have an extra $420,000! If you aren’t currently saving anything for retirement, that could be your retirement nest egg.
Another way to think about this, especially as you get older, is the “25 times rule.” That is a somewhat conservative, fairly rough “rule” that says you need 25 times your annual expenses saved to cover those expenses in retirement. (It’s based on the standard 4% retirement income withdrawal rate “rule.”) If you have a monthly recurring debt expense of $750, you would need 12 times that amount, which is $225,000. That is a 300x multiplier on any monthly recurring expense, which is why ongoing loan payments are a significant concern in retirement.
At this stage of life, the most important thing is to reduce your debt and avoid taking on new debt. Use the debt snowball approach to get rid of it—you may find you can get it done sooner than you think. Start with the smallest debt and knock it out as quickly as possible, then “roll” what you were paying on that debt to the next largest, and so on. Ideally, you will be close to paying off any student loans by this time. Although they do tend to be low-interest, try to get them paid off fairly soon so that you can divert that money to other goals.
You may have to make some sacrifices to get this done, but it will be worth it in the long run.
Different strategies for different kinds of debt
Student loans. These guys tend to hang around for what seems like forever. First, make sure you aren’t missing any debt-forgiveness or repayment grants. (These tend to be restrictive, but they’re out there. An article on NerdWallet does a good job of listing many of them.) If your loans have extremely low interest, especially if the interest is tax-deductible based on your income, you can take your time but stay at it. Remember, every dollar you don’t have to put toward these loans can be used for other purposes. If you’re able, making extra student loan payments to get them out of the way is a good move, especially if they carry a higher interest rate than what you are getting from your investments. If you owe more on these than you do any of the debts in the next section, just make them the last one you tackle with your debt snowball. By the time you get to that point, you should be able to knock it out pretty quickly.
Personal loans, credit cards, and auto loans. Unlike mortgage and student loan interest, these loans often carry higher interest rates and lack tax benefits. Because many people have all or most of these types of debts, they can really eat up your income and reduce both your standard of living and your ability to save. Use the debt snowball described above to retire these debts—it works!
Mortgage. Once you pay off your consumer and student loan debts, turn your attention to your mortgage. But don’t wait to start saving, or to save more, until you pay off the mortgage. Make sure you’re saving at the level you need to before diverting extra money toward the mortgage. The easiest way to pay it off early is to make additional principal payments. If you have more than 20 years remaining, consider refinancing into a 10- or 15-year mortgage if you can afford the slightly higher payments. Downsizing is another way to go. If you do, be sure to get a 10 or 15-year mortgage on the smaller house. You can take your time with this one, but try to get it done before you retire.
Then what?
The ultimate goal is to go into your retirement years with little or no debt. (Check out this earlier article titled, “Don’t Carry Debt into Retirement“—it gets into the details about why that can be such a positive thing.) The bottom line is that once you are out of debt, including your home, you will have much more flexibility, freedom, and peace of mind with your finances.
Beyond debt: the other two principles
While eliminating debt is your top financial priority in your 30s and 40s, this life stage demands attention to the other principles as well:
Caregiving Principle in Your 30s-40s: This is often when caregiving responsibilities become real:
- For your children: Ensure you have adequate life and disability insurance
- For your parents: Begin conversations about their long-term care plans and preferences
- For yourselves: Create or update comprehensive estate documents (wills, powers of attorney, healthcare directives, guardianship designations)
- Consider: Whether long-term care insurance makes sense to purchase now, while you’re younger and rates are lower
Ministry Principle in Your 30s-40s: Despite the busy season of raising children:
- Maintain giving: Even while eliminating debt, continue some level of consistent giving (Dave Ramsey suggests pausing temporarily during “baby step 2” if needed, but resume immediately)
- Serve together: Find ways to serve as a family in your church
- Model stewardship: Let your children see your financial discipline and generosity
- Use your skills: Your professional skills can bless non-profits and ministries
- Think ahead: Begin thinking about how you want to serve when children are older
The danger of focusing only on debt elimination is becoming so financially focused that you neglect service and generosity. Biblical stewardship eliminates debt not just to have more for yourself, but to free up resources for giving and serving.
Connecting to the complete framework
This article addressed the Self-Sustaining Principle—specifically, the critical importance of eliminating debt during your peak family-raising years. Debt constrains your ability to save, give generously, and build financial sustainability for retirement. Getting out of debt and staying out creates the financial margin necessary for faithful stewardship.
However, your 30s and 40s demand attention to all three principles simultaneously. While you eliminate debt (Self-Sustaining), you must also prepare estate documents and think about aging parents (Caregiving), and you must continue serving and giving despite financial pressure (Ministry). To understand how these three principles work together throughout your life, see the complete Biblical Framework for Retirement Stewardship.