Baby boomers are spending everything they earn — and then some — and helping drive the personal savings rate to its lowest level since the Great Depression.

"I struggle with saving myself," said Nancy Harvin, 44, of Washington. "I think we are consumer-driven. We have to have things."

The nation's personal savings rate for all of 2006 was a negative 1 percent — the worst showing in 73 years, according to the U.S. Commerce Department. The negative rate means baby boomers and other Americans are spending all of the money they have left after paying taxes. They are dipping into savings or increasing their borrowing to finance current spending.

"I'm living from check to check," said Scott Cooke, 48, who is starting an interior design business in the Washington area and lacks resources to set aside reserves.

Surveys indicate the nation's spendthrift ways are not likely to change soon. More than a third of 2,000 adults questioned recently by the Pew Research Center said they often or sometimes spend more than they can afford.

The 1 percent negative savings rate in 2006 followed a 0.4 percent negative rate in 2005. There have been only four years in history that the savings rate has fallen into negative territory. The other two were 1932 and 1933 during the Great Depression when as many as one in four people were out of work, and households were exhausting savings to pay rent and buy food.

The savings rate is computed by taking the amount of personal income left after taxes are paid, an amount known as disposable income, and subtracting the amount of people's spending.

Last year's negative rate was attributed not to a lack of jobs but to good economic developments — including low interest rates that made it attractive to borrow money to make purchases and refinance home loans. Refinancings gave homeowners an additional $900 billion to spend last year, a big factor in driving the savings rate lower.

In the backdrop of low savings rates are 78 million baby boomers who are preparing to retire. The oldest of the boomers will turn 62 next year, the first year they will be eligible to collect Social Security.

As the nation's largest generation stops working, that will likely further depress savings because typically retirees are drawing down their accumulated investments to make up the difference between the salaries earned on the job and their smaller Social Security and other pension payments.

"We have to face the question of whether we are anywhere near where we need to be with our savings to see us through," said David Wyss, chief economist at Standard & Poor's in New York.

Wyss said the savings rate is likely to rise back into positive territory but remain at extremely low levels as more boomers retire.

Another factor contributing to the low savings rate is the rising income inequality in the country. The rich, who traditionally save the most, don't feel the need to save as much any more because their net worth has been soaring with fatter paychecks for those at the upper levels of the income scale. They have also benefited from a rebounding stock market.

"Wealthy individuals have become very wealthy and they now have a larger nest egg and therefore they are spending more of their current income than they have historically," said Mark Zandi, chief economist at Moody's Economy.com.