Forced to rely more heavily on credit cards and other forms of debt to make ends meet, many older Americans are drowning in a sea of bills they can't handle and living in fear that things will get worse.
"We may be entering several generations of a depression era for future U.S. retirees," said Thomas J. Mackell, former chairman of the Richmond Federal Reserve Bank.
"The problem is 50 percent of baby boomers are ill-prepared financially to retire," he said. "They just don't have enough money, and many of them are in debt."
Things weren't great even before the financial slump of the last two years. Then the economic downturn hit older people hard, based on research funded by the state's economic development department, making an already challenging situation that much more difficult.
For a variety of reasons -- from medical bills to limited retirement income to relatives in need -- a growing number of older people have been turning to the bankruptcy courts for relief in recent years.
From 1991 to 2007, bankruptcy filings by those 65 and older increased 150 percent, while bankruptcy filings for seniors in the 75-to-84 age group climbed 433 percent, according to the Consumer Bankruptcy Project, a study co-authored by Elizabeth Warren, then a Harvard University law professor. President Barack Obama appointed her this fall to head the new Consumer Financial Protection bureau.
Things haven't improved for older folks, according to Eric Brucker, a professor of economics at Widener University in Chester, Pa. He is the chief researcher in a state-funded survey examining the recession's financial toll on older Pennsylvanians.
More than half (52 percent) of the retirees surveyed said Social Security was their single most important source of retirement income.
In May, Brucker's team conducted a random telephone poll of 750 working Pennsylvanians born before 1964, the last birth year of the baby boomers. Comparing data from a survey completed before the recession in May 2007 to the more recent survey, Brucker said the responses indicated retirees were struggling.
Most said they worried about health care costs and retirement savings. They don't have enough income and have trouble finding jobs.
Theodore Connolly, a bankruptcy attorney in Boston and co-author of "The Road Out of Debt: Bankruptcy and Other Solutions to Your Financial Problems," said times were especially tough for baby boomers, ages 45 to 64.
"With the job environment the way it is and the problems people age 50 and over are having finding employment, the continuation of their problems could increase dramatically if the economy doesn't turn around," he said.
Their homes -- a major asset many had expected to rely on in retirement -- are decreasing in value. Stock market investments may not be growing at expected rates, and whatever retirement income stream they were counting on from bank CDs and government bonds has been reduced to a mere trickle.
"In our current hyper-low interest-rate environment, the burden of carrying a set amount of debt is much less than in previous decades," said Dr. Russell James, an associate professor of personal financial planning at Texas Tech University. "But ... the assets they set aside are also generating far less income than in previous decades."
Bob Chiocca, branch manager of the Charles Schwab office in Pittsbugh, said changing attitudes and lower borrowing costs have led more older Americans to carry debt. Thirty years ago, it would have been taboo.
"Traditionally, people entered retirement with no debt," Chiocca said. "Today, ... retirees are learning to live with some form of debt" -- primarily mortgage debt, but also from credit cards and car loans. "The fact that rates are so low makes affluent clients more comfortable with it."
Advisers at Advantage Credit Counseling in Pittsburgh also say an alarming number of people are so overwhelmed with debt they have stopped funding their retirement accounts.
"We do not recommend that," said Kristen Garrett, public relations coordinator. "Our counselors try to stress the importance of retirement funds, especially to older clients."