Image: Close-up of a senior man looking sad © George Doyle,Stockbyte,Getty Images

More Americans are reaching their 60s with so much debt they can't afford to retire.

Most people used to pay off their debts before retiring. But as wages have barely kept up with rising prices over the past 35 years, Americans have pushed debt higher, living beyond their means. Now, people are postponing retirement, cutting living standards or both.

All kinds of debt held by this age group have risen, but the big problem is mortgages. Thirty-nine percent of households with heads aged 60 through 64 had primary mortgages in 2010 and 20% had secondary mortgages, including home-equity lines, according to research group Strategic Business Insights' MacroMonitor. That was up from just 22% and 12%, respectively, in 1994.

The housing crash has made things worse. A few years ago, homeowners in their 60s with big mortgages could sell their homes for a profit and buy smaller places or rent. But the drop in housing values means that many homeowners have little equity, and some now owe more than their houses are worth.

People have tried to reduce debt since the financial crisis, with limited success. Americans of all ages owed $11.4 trillion at the end of the second quarter, based on data from the Federal Reserve Bank of New York. That's down about 15% from 2007 but nearly double what they owed in 1999, adjusted for inflation and population.

Hard to catch up

Older Americans also have struggled to dig out in the past four years. "Relative to the value of their homes, the amount of indebtedness if anything has gone up because house prices have fallen faster than mortgages have been reduced," says Christopher Herbert, the director of research at Harvard's Joint Center for Housing Studies.

Many have little choice but to keep working. "I imagine I'll be working until I'm 70," says Christine Shiber, a Methodist minister in California's Bay Area, who is struggling to pay off her mortgage, credit card debt and a loan she took against her retirement account.

Debt isn't the only problem clouding retirement prospects. People aren't saving enough either. As calculated in a Wall Street Journal article earlier this year, the typical American household nearing retirement with a 401k retirement account has less than one-quarter of what it needs in that account to maintain its standard of living in retirement.

Four out of five households with heads in their early 60s and with mortgages had too little savings in 2008 to pay off debts without dipping into retirement accounts, according to Boston College economist Anthony Webb.

Instead of boosting their savings as they approach retirement, a period when people usually make their largest retirement contributions, some older people are stopping contributions in order to service debts. Some who had already retired are going back to work because they can't make the financial numbers work.

The combination of easy credit, low interest rates and a consumption-oriented culture helped fuel a spending binge for Americans until the financial crisis. People with problems aren't just those who took subprime loans or spent foolishly on lavish lifestyles. They are people from all backgrounds, including some with six-figure incomes.

Planning to work longer

Shiber, 59, figures she will work until she is 70.

"We have gotten into this 'debt's OK' mentality, and it is going to be very hard to get out of it," says financial planner Greg Heller of Heller Capital Resources in Los Angeles, who says he has wealthy clients in their 50s with problems.

Shiber and her husband borrowed to buy a home and for their children's education, something many Americans have done. They divorced in 2007 and sold the home, repaying debts.

But Shiber needed a place to live. In 2008, she took out a new mortgage to buy a condominium. The down payment, together with her son's college costs, used a big chunk of her remaining savings.

Soon, Shiber realized that she wasn't making ends meet. She had trouble paying credit card bills and started running a balance. Her 2001 Ford Focus needed a big, unexpected repair. She borrowed against her retirement account.

To her relief, Shiber negotiated a raise late last year. She then got a letter from her bank saying it had under-calculated her property-tax obligations. It raised her monthly mortgage bill, including property taxes, by an amount slightly more than the raise.

Shiber said her debt burden began to seem biblical. "Even with Job, there weren't these coincidences," she laments. "I said, 'Now, God, you are really messing with me!'"

After consulting with a financial adviser, Shiber cut living expenses. She travels less to visit her mother and daughter in New York and has fewer meals out. To her adviser's dismay, she also has cut most of her contributions to her retirement plan.