Time Machine detected that your backups on “Time Machine Message: Data” can not be reliably restored. Time Machine must erase your existing backup history and start a new backup to correct this." Will I lose all of my backed up data?

If you erase it yes, erasing wipes out everything. But you can turn around and create another TM backup on the erased drive,

How old is the drive? We change HDDs every five years even if operating properly. They're just too cheap to trust past that for us.

I suggest you hold off erasing for now and get a replacement HDD and use it. You might find a way to retrieve the data at some later date. Of course you might not.

Yes, if you erase the backups are gone. However if your External Hard Disk is 5 years old or older it would be wise to replace it. All hard disks die, some may last a few months while others can last 10 years. It is wise to replace them every 5 years or so, why because they fail when you least expect them to and when you need them the most!

Your welcome. If you find yourself in the market to replace it then I'd suggest the following:

OWC Mercury Elite Pro