When retirement is on the horizon and you have very little money saved, it's time for drastic action. You can't live comfortably on Social Security alone, and the last thing you want is to retire and then run out of money.

But there are steps you can take to live on much less and make retirement possible. Here are three things you should do ASAP if you need to leave the workforce and you're worried your savings are insufficient. 

Older couple looking at financial paperwork.

Image source: Getty Images.

1. Downsize

Moving to a cheaper home could help solve your retirement readiness problem both by freeing up cash and by reducing your cost of living. 

If you have equity in your current home, proceeds from its sale could be used to finance a new place with no mortgage, or a much smaller one. Alternatively, you could use the money you net to fatten your investment account while taking out a mortgage for your new place. Since mortgage rates are pretty low and the amount you'd have to borrow for an inexpensive home shouldn't be much, your investment returns should hopefully exceed the cost of interest.

Downsizing could also help stretch your money by lowering all kinds of other costs. A smaller and cheaper house should have lower property taxes, lower utility bills, and less-expensive repairs. If you can cut all of these costs, the savings you have will stretch further.

2. Move to a walkable area and get rid of a car

If you're downsizing your home anyway, you may as well be strategic about where you move and pick a walkable area. If you live somewhere you can walk to most places, you can cut costs dramatically by getting rid of your vehicle. 

Cars come with a host of ongoing costs, including loans, insurance, gas, and repairs. Getting rid of your vehicle could save you thousands of dollars per year. And if you sell the car, you could use the proceeds to fatten your savings account and give yourself a little more money to live on. 

If you're married, you may decide to keep one car to share while reaping the benefits of getting rid of one of your two vehicles. But if you're single, getting rid of your only vehicle could still make a lot of sense if you've moved to the right area. You can always rent a car if you occasionally need a vehicle. 

3. Reduce your tax bill by choosing a tax-friendly state

Moving to a tax-friendly state could also dramatically reduce your cost of living.

Some states tax Social Security benefits and pensions while others tax neither. There are also big differences in property and sales taxes -- and that matters when you're on a fixed income.

Check out our guide to tax-friendly states for retirees to find some options to keep more of your limited retirement funds.

Take action ASAP if you don't have enough saved for retirement

Moving and getting rid if your car are drastic. But when you have too little money saved for retirement, drastic action is often necessary.

If you try to maintain a lifestyle you can't afford, you could find yourself broke later in life when it's too late to go back to work and much harder to make big changes. The last thing you want is to be in your late 70s or early 80s and forced to move because you have no money left. 

If you act immediately, you can preserve your savings by making your money stretch further -- and you'll be able to build a new life for yourself in a home and location you choose.