Since Mountain Lion Time Capsule can now backup to encrypted sparsebundles. This is great and easy to setup for new backup locations, just select 'encrypt backups'. However, I have backups for around a year now that I want to keep. If I go through the setup, I can only erase the current (unencrypted) backup and start over, or keep using the current (unencrypted) backup. So how can I work around this issue and encrypt my existing backups?
The only solution I can offer is to use Disk Utility to create an encrypted sparsebundle, then copy the contents of the existing backup disk into the sparsebundle. This is essentially what Time Machine does.
Then, select a new backup disk in Time Machine and select the sparsebundle. If all works according to plan, Time Machine will ask for your password and begin using the new sparsebundle.
Here is a solution
Basically you remove the existing target and re-add it and the select Encrypt.
However, the article is covered by copyright so I can't copy it into this answer but it archived in the Wayback Machine in case it ever disappears.