LIMRA’s 2010 Retirement Industry Conference in Washington D.C., this week was filled with doom and gloom, despite the recent surge of the Dow Jones Industrial Average.

Michael Tanner, a senior fellow at the Cato Institute, opened the conference by outlining how the growing problem of American entitlement programs are wreaking havoc on the country's financial well-being.            

“The present value of our future obligations is more than $100 trillion and as the full force of entitlement programs kicks in, it will only get worse,” he said to a room filled with about 350 attendees. “There is no courage in Washington until someone is willing to stand up and do something.”

According to Tanner, Social Security faces a budget shortfall of over $15.8 trillion, while Medicare’s unfunded liability is up to $100 trillion. Medicaid, he said, will soon add hundreds of billions of dollars to federal and state spending. He said that collectively the unfunded liabilities of Social Security, Medicaid, and Medicare will swallow over 40% of gross domestic product by 2050.

How does the government plan to pay for this budget shortfall? Higher taxes, Tanner said.

He estimated that both the corporate tax rate and top income tax rate will need to be raised. He foresees the corporate tax rate will increase to 88% from the current 35% and the top income tax rate will soar to 63% from 25% for middle-income workers.

Tanner doesn’t believe that raising taxes will be sufficient to make up for the trillions in unfunded liabilities. The answer if the government hopes to meet its future financial obligations: cut spending and reform entitlement programs, he said.

“Clearly, the current entitlement programs are unsustainable,” said Robert Kerzner, the president and chief executive officer of LIMRA, LOMA and LL Global. “Americans are going to have to take more responsibility for their financial security — especially in retirement.”

Yet, it is clear from LIMRA’s research that Americans are not prepared for the retirement reality. Jafor Iqbal, an associate managing director of LIMRA retirement research, said at the conference that despite the fact that 44% of pre-retirees plan to work in retirement, 24% are involuntarily forced to retire. Research indicates that couples are unlikely to retire at the same time. In fact, 76% of retirees do not retire simultaneously.

In addition, pre-retirees underestimate longevity risk. With individuals living longer it is not nusual to find people living for 10 or 20 plus years in retirement. Yet they are not prepared. Only one in six retirees even have a financial plan, according to LIMRA’s research.

So, what does this research mean?

The results indicate a huge opportunity for advisors. Pre-retirees and retirees need more realistic expectations. If pre-retirees understand that although they may want to work, they may not be able to, it could influence their retirement planning. And with 36% of retirees having no financial plan, the opportunities to help steer them in the right direction are enormous.