Figurines in wheelchair on pile of coins © Creativ Studio Heinemann, Westend61, Getty Images

Francine and Jim Bostick of Manhattan, Kan., are a poster couple for paying off debt late in life. But not everyone celebrates their accomplishment.

At ages 57 and 68, the Bosticks were struggling to pay the minimums on more than $120,000 in credit card debt. When Francine found herself charging utility payments and groceries because the checking account was out of cash, she realized they needed help.

The couple heard from a friend about a Topeka, Kan.-based nonprofit called Housing and Credit Counseling and decided to enroll in the agency's debt management plan. The Bosticks used Jim's Social Security and pension checks to send monthly payments to the agency, which forwarded money to the creditors. To cover their living expenses, Francine, who worked as custodial manager for a nearby university, took a second job cleaning classrooms for the local school district. Jim, retired from a maintenance job at the same university, delivered car parts for 30 hours a week until dementia left him unable to work.

"I would work at the university from 7:30 a.m. 'til 4 p.m., then go home and fix Jim something to eat," Francine said. "Then I would go work at one of the schools from 5 until 9 p.m. four nights a week."

Five years later, they'd paid off every dime. The National Foundation for Credit Counseling named them "Clients of the Year" for 2012. They've been featured in glowing articles in The New York Times, the Christian Science Monitor and U.S. News and World Report, among other outlets.

By the time the couple finished paying the debt, though, Jim's dementia had advanced to the point where he didn't understand what they were celebrating, Francine said.

Image: Liz Weston

Liz Weston

Debt expert Steve Rhode, who once founded a credit counseling agency like the one that advised the Bosticks, thinks repayment was a colossal mistake.

At their ages, and with Jim's diagnosis of dementia, the couple should have been conserving every dime -- not sending $2,300 a month to Bank of America, Chase and other creditors, Rhode said.

"She sacrificed her remaining good time with her husband when she should have been saving that money for her retirement," said Rhode, who now runs the Get Out of Debt Guy website that helps consumers evaluate different debt payoff methods. "She paid a huge cost, and for what?"

How to deal with potentially devastating debt is an issue that's confronting a growing number of aging Americans. It's a trend that doesn't bode well for their retirements.

Craig Copeland of the Employee Benefit Research Institute predicts millions of older households are at risk for "severe changes" and big drops in their retirement lifestyles compared with previous generations.

"Many of these people with debt also have low savings," Copeland said. "You can expect when you retire that your income will go down, and with low savings and high debt, you're going to have trouble servicing this debt."

Here are just a few telling statistics from the Federal Reserve's Survey of Consumer Finances:

Overall debt. More than 61% of households headed by people aged 65 to 74 had debt in 2010, the most recent data available. That was up from about 50% in 1989. Among households headed by those 75 or older, the figure nearly doubled over the same time period, to 38.5%.

Credit card bills. Among households headed by those 75 and older, nearly 22% had credit card debt, up from 10% in 1989.

Mortgages. Far more older households had mortgage debt. Only 21.1% households aged 65 to 74 had a mortgage in 1989, compared with 40.5% in 2010. Just 6.7% of households headed by someone 75 or older still owed money on their homes in 1989, compared with 24.2% in 2010.

Student loans. Older people even have more education debt than their predecessors. The percentage of households headed by people 55 to 64 with education debt more than doubled between 1989 and 2010 (from 4.1% to 9.3%), and the amounts owed more than tripled, from a median of $4,200 (in 2010 dollars) to $15,100. For the first time in 2010, a statistically significant number of households aged 65 to 74 reported having student loan debt: 4.2% had education loans, with a median amount owed of $12,000.

Looser credit standards that began in the 1990s lured many of today's retirees and near-retirees into debt. The result is that more are people burdened by debt as they age.

"It's become acceptable to have debt and to have debt in retirement," Copeland said. "Older generations (who came of age during the Depression) were less likely to be comfortable with debt."

More on The New Face of Retirement:

Add in a recession plus a weak recovery, and it's not surprising more older people are winding up in bankruptcy court. Bankruptcy filings by people aged 45 and older rose 19% from 2006 to 2010, according to a study by the Institute for Financial Literacy (.pdf file). People 55 to 64 made up 18% of bankruptcy filings in 2010, compared with 14% in 2006. Those 65 and older constituted 9% of the filings, up from about 8%.

But many debt-ridden people try to avoid Chapter 7 bankruptcy, which generally wipes out credit card and medical debt. Instead they often try to repay their debt, sometimes through Chapter 13 bankruptcy, which requires a five-year repayment plan.

Many don't succeed. The dropout rate for those who enroll in credit counseling debt management plans is 45%, according to the National Foundation for Credit Counseling; Rhode suspects the failure rate is actually higher.

All that money poured into doomed attempts to avoid bankruptcy angers Rhode. Too many people with debt, he said, don't think enough about how their efforts to pay off the past will affect their futures. He estimates the Bosticks' repayment plan likely cost them half a million dollars in lost retirement income, if the money sent to creditors had been invested instead. (Rhode has a calculator that can help people of any age estimate the potential impact of debt repayment plans on their retirements.)

"People talk about the moral obligation to repay their debts," Rhode said. "There's also a moral responsibility to take care of themselves (in retirement) when they can't earn money."

Francine says she doesn't regret the couple's decision to repay their debt. Now 62, she has retired and works only occasionally to supplement the couple's pensions. They have "a real savings account" for the first time, and Francine recently bought her first-ever new car, using a zero-percent auto loan made possible by her good credit scores.

"That made it less expensive than the used vehicle I was considering," Francine said.

She says the credit counselor advised them that they qualified to have their debts erased in Chapter 7 bankruptcy, but the couple didn't want to take that route.

Because the debts stemmed from overspending, rather than emergencies or medical bills, the couple felt morally obligated to pay. Francine also worried that if the way out were too easy, they wouldn't learn their lesson.

"Some of my family members thought I had rocks for brains because we didn't want to file for bankruptcy," Francine said. "I just had a feeling . . . who's to say if we had filed then we wouldn't be in trouble now? I wouldn't have learned the difference between wants and needs."

Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.

Click here to become a fan of MSN Money on Facebook

More on The New Face of Retirement: