After 20 months without a job, 55-year-old Henry Dietz has nearly drained his 401(k) retirement plan.

He already has used up his personal savings, borrowed extensively, switched to a catastrophic health plan, which only covers medical emergencies, and even skipped family funerals because of travel expenses.

If he doesn't find a job soon, he may not be able to make his mortgage payments and the family may have to "move back with Mama," says the married father of three from Raleigh, N.C., who was laid off from an advertising agency.

Mr. Dietz's situation may be extreme, but many people are facing a similar dilemma: over 50, unemployed and running out of options.

With no job prospects long before they can afford to retire -- and Social Security benefits still years away -- many unemployed workers in their 50s and early 60s are struggling to pay the bills, the mortgage, health-care expenses and college tuition. It's a scenario that was unimaginable to many just a few years ago.