Check to see if you are in a group. Even if it's a group of just you, it can still be a group that is higher level than you are. For instance, if you grouped with your wife who is level 70, then she exited the group, you would still be in that level 70 group and that would explain why you are getting a message that your level is higher than the enemy's.
Look at your group tab to see if you can create a group, or if you are still in a group, even if the group consists of only you.

It's exactly as Glean said, in 99.99% cases when such thing occurs you are still in group which level is higher than your/monster level hence the reduced drops.