Image: Senior man looking sad © George Doyle, Stockbyte, Getty Images

Growing numbers of older Americans are spending their retirement years in poverty, according to a recent Employee Benefit Research Institute study (.pdf file). The proportion of older people living below the poverty line has been growing steadily since 2005, and many of those people are falling into poverty as they age and spend down their savings.

Poverty rates for people ages 65 to 74 climbed from 7.9% in 2005 to 9.4% in 2009, according to the EBRI analysis of University of Michigan health and retirement study data. For older retirees ages 75 to 84, there was an even steeper increase, from 7.6% to 10.7% over the same time period. But it's the oldest retirees who are the most likely to live in poverty: 14.6% did so in 2009.

Many older Americans are falling into poverty as they age. In 2009, the most recent year included in the study, 6% of those age 85 older were new entrants in poverty, up from 4.6% in 2005. And while 3.3% of people ages 75 to 84 fell newly into poverty in 2005, that number increased to 5.6% by 2009.

One of the biggest drivers of poverty in old age are failing health and the associated medical costs. Most retirees living below the poverty line (70%) have suffered acute health conditions such as cancer, lung disease, heart problems or stroke, compared with 48% for those above the poverty line, according to health and retirement study data. And almost all senior citizens living in poverty (96%) have some sort of health condition, such as high blood pressure, diabetes, psychological problems or arthritis, versus 61.7% of retirees with incomes above the poverty line.

"Medical expenditures go up for the elderly as they age, and medical expenses have been rising over the past decade very rapidly," says Sudipto Banerjee, a research associate at EBRI and the author of the report. "A lot of people have to move to nursing homes, and nursing homes are very expensive. People who live there, they lose their income and assets very quickly."

Many people also spend down their retirement savings too quickly, especially during recessions. "As people age, personal savings and pension account balances are depleted," says Banerjee. "Also, the rising poverty rates noted correspond to the two economic recessions that occurred during the last decade. I would expect that as the economy does better, the rates will go down."

Once you have spent your nest egg, your only remaining source of income is likely to be Social Security. Social Security payments are based on your earnings during your 35 highest-earning years in the workforce. Those who didn't work for 35 years get smaller payments because zeros are included in the average.

Poverty rates for women were nearly double those for men in almost all years between 2001 and 2009. In 2009, poverty rates were 7% for men and 13% for women. And both men and women who are single have significantly higher poverty rates than married couples. When one spouse dies, the total Social Security benefit received by the household often decreases.

The Census Bureau reports that 9% of people age 65 and older lived below the poverty threshold in 2010. But there is an incredible amount of geographic diversity in poverty rates, ranging from more than 25% in Opelousas-Eunice, La., and Gallup, N.M., to less than 2% in Pocatello, Idaho; Helena, Mont., and Ames, Iowa.

A recent Urban Institute study (.pdf file) predicts that poverty rates for people at age 67 are likely to decline in the future. The analysis projects that 7% of Depression-era babies will live in poverty at age 67, compared with 6.1% of late baby boomers and 5.7% of Generation Xers. However, retirement poverty is expected to increase for people without advanced education. For example, the study predicts that retirement poverty rates for high-school dropouts could increase from 13.5% among Depression-era babies to 24.9% for the oldest baby boomers.

Click here to become a fan of MSN Money on Facebook

Older retirees may have few opportunities to pull themselves out of poverty once they have crossed that threshold. The elderly may not have many opportunities for employment, and they could be further limited by health issues.

The Urban Institute expects retirement-income inequality to increase dramatically over time. The study found that among Depression-era babies, the median income in the top income quintile will be 7.5 times higher than in the bottom income quintile. For Generation Xers, the retirement income gap will increase to a factor of 10.4.

"More income for boomers and Generation Xers is from retirement accounts and less from defined-benefit pensions, and a larger share of income will be from earnings," says Barbara Butrica, senior research associate at the Urban Institute and co-author of the report. "If we look at their (retirement income) replacement rates, Generation Xers and boomers are projected to be significantly worse off on a relative basis."

More from U.S. News & World Report: