Australians are expected to live longer over the next 40 years, but the change will also put more pressure on the country’s health and aged-care systems.
The latest 2026 Intergenerational Report looks ahead to 2065–66 and shows that life expectancy is expected to rise while the number of older Australians grows much faster than the overall population. Health spending is expected to become one of the biggest long-term pressures on government budgets.
Australians are expected to live longer
The latest Treasury outlook projects that life expectancy will continue to increase over the coming decades.
By 2065–66, life expectancy is projected to reach 89.5 years for women and 86.1 years for men. Current life expectancy is about 85.1 years for women and 81.1 years for men based on the latest available Australian health data.
This is a major change for Australian society. People are not simply reaching retirement age and then living a few more years. More Australians are expected to spend a longer period in later life.
That can be a positive development because people have more years with family, friends and their communities. But it also means the country needs more health and aged-care services for an older population.
The number of older Australians is set to rise sharply
The ageing of the population is one of the biggest changes highlighted in the 40-year outlook.
The number of Australians aged 65 and over is projected to double from about 4.8 million in 2024–25 to 9.7 million in 2065–66. The number aged 85 and over is expected to more than triple, rising from about 603,000 to 1.9 million.
| Measure | 2024–25 | 2065–66 projection |
|---|---|---|
| Australians aged 65+ | 4.8 million | 9.7 million |
| Australians aged 85+ | 603,000 | 1.9 million |
| Women’s life expectancy | 85.1 years | 89.5 years |
| Men’s life expectancy | 81.1 years | 86.1 years |
The growth among people aged 85 and over is particularly important because health and care needs generally increase as people get older.
Why longer lives can mean higher health spending
Living longer does not automatically mean every older person will need expensive medical treatment. Many Australians will remain healthy and active well into later life.
However, an ageing population generally creates greater demand for health services, aged care and other support. The latest report identifies health, aged care and the NDIS among the major long-term spending pressures facing government.
The 2026 outlook estimates that health spending will rise from about 4 per cent of GDP to 6.2 per cent over the long term. Public hospital funding is expected to account for more than 60 per cent of the additional Commonwealth health spending.
That means the issue is not simply that there will be more older people. The government will also need to provide more health services as the population’s needs change.
Australians are already spending more on health
The increase in health spending is not only a future issue.
Australia spent an estimated $270.5 billion on health goods and services in 2023–24. After allowing for inflation, health spending per person increased from $8,615 in 2014–15 to $10,037 in 2023–24.
Hospitals accounted for the largest share of total health spending, at $113.8 billion, or 42 per cent. Primary health care, which includes services such as general practice and public health, accounted for another $89.1 billion, or 33 per cent.
This shows why changes in the number and age of Australians can have a large effect on the health system.
The ageing population is changing the worker-to-retiree balance
Another important part of the outlook is the changing size of the working-age population compared with the number of older Australians.
The proportion of Australians aged 65 and over has already increased from 8.9 per cent in 1975–76 to 18 per cent in 2024–25. It is projected to reach 24 per cent by 2065–66.
At the same time, Australia’s fertility rate has fallen and population growth is expected to slow. Treasury expects the population to become older while growing more slowly over the next four decades.
This matters because working Australians provide a large share of the tax revenue used to fund government services.
Health is not the only pressure
Health care is part of a wider change in government spending.
As people live longer, demand for aged care is also expected to rise. The NDIS is another major long-term spending area, although the latest report includes the effects of reforms designed to slow its growth.
The three areas are closely connected. An older population can increase demand for medical treatment, aged care and other support services at the same time.
This does not mean spending will rise at exactly the same rate every year. Economic growth, government policy, medical technology, population changes and productivity can all affect the final outcome.
More older Australians does not mean more people will rely entirely on the Age Pension
There is also an important change happening in retirement income.
Treasury expects Australia’s maturing superannuation system to provide a larger share of retirement income in the future. The proportion of people above Age Pension age receiving a pension or other income support is projected to fall from 66 per cent in 2025–26 to 52 per cent in 2065–66.
This is significant because the number of older Australians is expected to rise even while the share receiving government pension support falls.
It means the long-term financial pressure from an ageing population will not come from the Age Pension alone. Health and aged care are expected to become increasingly important parts of the picture.
What longer life could mean for everyday Australians
For families, the changes could affect several parts of life.
More people may have parents or grandparents living into their late 80s or 90s. That can mean longer periods of retirement and more years when families may need to think about health care, housing and aged-care arrangements.
At the same time, healthier older Australians may continue working, volunteering and participating in their communities for longer.
The report therefore does not present longer life only as a cost. A healthier and longer-lived population can also contribute to the economy and society if people are able and willing to remain active.
The big challenge will be paying for rising demand
The central issue over the next 40 years will be how Australia pays for growing demand for health and care services while maintaining living standards.
Treasury expects the Australian economy to more than double in size in real terms by 2065–66, with income per person projected to be 55 per cent higher.
But the population will also be older, and a larger share of government resources will need to go toward health and care.
This makes productivity particularly important. If workers and businesses can produce more with the same amount of resources, the economy can grow faster and provide more capacity to fund public services.
What the 40-year outlook really shows
Australia is moving toward a society where people live longer, families have fewer children and the share of older Australians is much larger.
The projected rise in life expectancy is a major social change, but the rapid growth in the number of people aged 85 and over is likely to have an especially strong effect on health and aged care.
Health spending is already a large part of Australia’s economy, and the latest 40-year outlook expects it to take up a larger share in the decades ahead.
For Australians, the message is not simply that health costs will rise. The bigger change is that Australia will need to plan for a population that lives longer and requires different services at different stages of life. How successfully the country manages that change will depend on health outcomes, productivity, workforce participation, medical advances and government policy over the decades ahead.