We all hope that when we retire, we’ll have the funds to live the kind of life we’ve dreamt of for years. Travel, relaxation, volunteering, spending time with family - these are the things that so many of us imagine doing, and not one of them earns a paycheck.

But what if something happens to derail your retirement dream? Would you be prepared to recover? Would you have a contingency plan?

While no one likes to imagine a worst-case scenario playing out, it’s important to do so if we’re going to be truly prepared and able to live out our retirements the way we’d like to.

So what are these worst-case scenarios?

Running out of money

Without a doubt, this is the worst of the worst-case scenarios. Running out of money when you’re no longer willing or no longer able to work can mean living out the rest of your years dependent on family. That’s something nobody wants.

In order to prepare for this possibility, you need to figure out your base essential living expenses: mortgage or rent, utilities, health insurance, food, etc. Then you should compare them to your estimated guaranteed retirement income, to see how the two stack up.

If your estimated guaranteed retirement income is greater than your essential expenses, you should be covered and prepared for this worst-case scenario. Now, that doesn’t mean you’ll be living a lavish lifestyle, but you will, at least, have enough money to pay for your basic needs.

If your expenses are greater than your projected income, you’ll need to work on closing this gap. That might mean delaying retirement for a few years, taking a part-time or full-time job if you’re already retired, unloading unnecessary assets like a second car - there are lots of ways to make up the difference.

Decline in health

As much as we’d like to avoid the thought that we may end up needing around-the-clock care, many of us - almost 70 percent, according to longtermcare.gov - will end up needing long-term care at some point in our golden years.

Whether that’s assisted living, an at-home nurse, or residential care, the costs of long-term care add up very quickly. They can eat into not only your retirement savings, but the savings of your family members, too - so it’s vital to prepare for this possibility.

One way to do so is to purchase long-term care insurance, but you should consider this carefully. Because many policies can be extremely expensive and include lots of limitations,

talk it over with your financial advisor if you have one.

Another option is a life settlement, which allows owners of life insurance policies to sell their policies on the secondary market for a lump sum of cash greater than the policy’s cash surrender value. Many seniors who choose the life settlement option end up using the cash to pay for long-term care or immediate healthcare needs.

Of course, there are plenty of things you can do to maintain your good health for as long as possible. Exercising, eating well, staying socially active, and challenging your mind are just a few ways to prevent poor health from overtaking your retirement.

Retirement should be a comfortable period of life, when you’re able to spend your time on the things that are important to you, not worry about making ends meet. In order to achieve this goal, you’ve got to plan for the worst. That way, you’ll be able to overcome any challenges that may come your way.