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Picture this: you're a few years into a fast-track career, already winning a couple of promotions and earning good pay. Although you love your work, you've decided that a career path where you spend decades climbing the corporate ladder until you retire in your late 60s is not for you. Instead, your goal is to build on your earnings so that you can create enough financial stability to walk away from the nine-to-five in 20 years and follow your dream.

Maybe your plan is to switch from chemical engineering to writing science fiction, leave your marketing job to become a canoe outfitter, or retire from health administration to paint seascapes at the beach. How will you be able to afford your dream? Keep in mind that retiring early will mean shortening the amount of time you'll be saving before retirement and stretching out the years your savings will need to cover. Pulling it off will require turbo-charging your savings and applying the discipline of a marathon runner over your spending.

Catch the FIRE

If you're looking for a road map to get from your early-career 20s to your happily-retired 40s, you might consider adopting some of the practices of the Financial Independence/Retire Early (FIRE) movement. Devotees commit to following an aggressive saving strategy paired with frugal living. In fact, many true-blue FIRE enthusiasts set aside half of their earnings in order to achieve their goal of early retirement. If they maintain roughly the same standard of living in retirement, then that strategy gives them a year of retirement income for every year of work — without even counting the returns earned on the savings they invest.

Even if your current financial situation makes jumping completely into the FIRE movement unfeasible, you can apply some of its rules for financial stability. You can accelerate your savings over time while you keep your spending low, and pretty soon the goal of retiring before your 50th birthday won't seem so far-fetched.

Here's what you need to do to turn the idea of retiring in your 40s from an office daydream into your future reality.

Spend Less

If you want to shave at least 20 years off of the time you'll need to earn a salary that will guarantee your future financial stability, then you'll probably need to do some serious downsizing.

The first step toward achieving the necessary frugality is to track your current spending. Spend a month or more logging every dime you spend and see where that money goes. Then think about what you can cut out or cut back on and make a list. For example, you might consider dropping your cable TV subscription, canceling your gym membership, and either ensuring that your car lasts as long as possible or even using public transportation.

The secret to accumulating enough savings to retire in your 40s is to save as much as possible while you're still working.

Create Multiple Income Streams

You've probably figured out that to be able to cut your spending drastically, without having to live in a yurt or move back in with your parents, you need to be earning a healthy income. Maybe you're already earning enough from your job to live on just 40-50 percent of what you take home. If not, you'll have to figure out a way to add to your income.

You might start a part-time business and dedicate all of your earnings to your retirement savings. To avoid burning yourself out in your efforts to make more money, look for ways to generate passive income. The possibilities may include investing in real estate, buying shares in dividend-yielding stocks, and writing an e-book to sell your professional expertise or your passion for a favorite hobby.

Reduce Debt

If you're not already paying more than the minimum on your credit card bills, then you may not be ready to retire in your 40s. In fact, you should be adding as much as you can manage to your monthly payments.

The most cost-effective approach to eliminating credit card debt is to start by paying off the balance on the card that carries the highest interest rate. You save the most cash by eliminating your highest monthly interest charge. But in some situations, such as when your high-rate card also has a high balance, you might prefer to knock out your lowest credit card balance first. Your success in getting rid of that relatively low balance can motivate you to tackle one of the big ones next.

Other good debt-reducing strategies can include negotiating with your credit card companies for lower rates, consolidating your debt (including any student loans), and refinancing your mortgage.

Other Rules for Financial Stability

The best way to save regularly is to set it and forget it. Participate in your workplace retirement plan and make sure you're contributing enough to receive the maximum employer match. Create an automatic savings plan to transfer a specific amount from each paycheck every pay period.

Don't forget to allocate some of your savings to non-retirement accounts. If you're retiring before age 59 ½, you won't be able to access the funds in a qualified retirement account without facing a 10 percent tax penalty.

The sacrifices, hard work, and discipline you put into preparing for early retirement will pay off even if you ultimately decide to retire a little later than 40-something. The financial stability you gain will bring with it the freedom to enjoy more leisure time, more time with family and friends, and more time to pursue your passions. Speak with a financial advisor about how you can get ready to retire in your 40s if that's your dream.

Disclosures

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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