Americans’ confidence about their ability to retire comfortably has fallen sharply and stands at the lowest level in seven years, according to survey research released today by the Employee Benefit Research Institute (EBRI). The percentage of individuals highly confident about their retirement outlook dropped from 27 percent to 18 percent, according to EBRI.

Other key findings:

• Health care is a big worry: About half of current retirees say they are spending more on health care than anticipated; that confirms findings at the Center for Retirement Research at Boston College documenting the growing health care burden.
• Planning still lacking: Only 47 percent said they have developed a serious financial plan for retirement. That’s up slightly from 42 percent a year ago.
• Savings are inadequate: 72 percent say they have saved something for retirement, but 49 percent say it’s less than $50,000.

Wall Street Journal coverage of the survey is here.

Most Baby Boomers don’t understand the basics of Medicare, according to a survey by the National Association of Insurance Commissioners. Investment News reports that 66 percent of boomer respondents said they were “not very familiar” or “not at all familiar” with the plan’s options, such as Part B, which covers some medical costs, and Medigap insurance policies. Only 36% knew that Medicare eligibility begins at age 65 — not at age 62, the starting age for Social Security eligibility. Financial planners are trying to address confusion with their clients, according to the trade magazine:

“To educate their clients, planners are using webcasts and seminars, as well as providing regular updates on how Medicare coverage is changing. Clients and the advisers themselves are seeking this information, said Jay E. Zandell, owner and principal of Z Planning Group LLC, a Phoenix-based long-term-care planning firm. “There are too many misconceptions about what Medicare does,” said Mr. Zandell. “People go into retirement mode with the misconception that as long as they have Medicare, the health issues are addressed.”

Several large banks are offering no-fee banking services to consumers over age 50 as a way to pull in their more lucrative saving and investment accounts. Sounds like a smart move. NBC’s Jean Chatzky reported on the trend recently on the Today show.

Best banks for baby boomers-

Americans saving for retirement aren’t letting the current tough economy deter them from saving more. That’s the conclusion of new survey research released this week by Fidelity Investments. The survey shows that, among current Individual Retirement Account owners, 60 percent have contributed to their IRAs for 2007 or plan to do so. And 32 percent of that group increased the amount invested for the year.

Overall participation in IRA plans still hovers around 40 percent of U.S. households, according to John Ragnoni, senior vice president of retirement products at Fidelity. “We were encouraged by these results,” Ragnoni told me. “It shows IRA owners are still engaged with the retirement savings process and trying to make the contributions that get them on the right path. But we certainly still need overall to get overall IRA ownership up.”

Unfortunately, the lowest rates of participation are among younger Americans who would benefit most from getting an early start on retirement portfolios. Just 32 percent of Americans in their thirties said they are participating in an IRA plan, compared with 57 percent of people in their sixties.

Fidelity surveyed 500 current IRA owners and another 500 people who haven’t opened accounts.

Details on the survey are here.

A national survey suggests Boomers may be too optimistic about using the equity in their homes to fund retirement. Bell Investment Advisors, which commissioned the survey, reports that 68 percent of Boomers consider their homes a retirement asset. And here’s the most worrisome statistic:

Of those who count their homes as a retirement asset, one in four (24%) say it represents half or more of their retirement savings. “The problem with treating their residence as a retirement asset is that Boomers must move to realize any value from their homes,” said Jim Bell, the company’s president. “Additionally, they may not be able to sell their homes when they want to or for the price they want, which may alter their retirement plans.”

Other key findings:

• Most Boomers expect to keep working past traditional retirement age, but the type of work will be dictated by financial need. Those who consider themselves well-funded plan to pursue personal passions
• One in four Boomers believe they have sufficient funds to retire, but will need to reduce their spending in retirement.

Financial services companies need to expand the focus of Boomer-oriented retirement planning services beyond the “superrich,” according to Investment News. Affluent investors –with $2.5 million in assets or more–are the industry’s most profitable customers, but the big opportunity is investors with slightly more modest assets, ranging from $500,000 to $2.5 million. They’ll have $20 trillion in retirement assets by 2020.

“In the next year, we expect a number of firms, both big and small, to fill the gap with powerful technology that simplifies the retirement-planning process without sacrificing sophistication,” write Mark Elzweig and Nancy Miller. A study by Financial Research Corp. indicates that up to 40 percent of Boomers age 40-60 might be “in play.”  But the big challenge will be serving this niche profitably, as clients increasingly want expensive personalized service and face-time. Financial services giants prefer cheaper automated services.