Already tied for the world's highest life expectancy for men, Australia is set to improve on that statistic in the decades ahead.

The government's Inter-generational Report released March 5 provides projections for Australia 40 years out. It shows male life expectancy will climb to 95.1 years for men and 96.6 for women in 2054-55, compared with 91.5 and 93.6 years currently.

But there's a catch -- Australians will need to work longer, too.

"It may well be the case that people are coming back into the workforce at the age of 80,'' Treasurer Joe Hockey, Australia's equivalent of a finance minister elsewhere, said last week after releasing the government's long-range forecasts. "I mean, I stood with a man that's 83 and still working five days a week'' he said, referring to a visit he made to a hardware store in Sydney.

Australia held the longest life expectancy for men together with Hong Kong, Japan, Iceland, Norway and Switzerland, according to a United Nations Population Fund report in 2012. For women, it had the seventh longest, trailing nations including Japan, Italy, Spain and France.

Australia is also projected to have about 40,000 people aged over 100 in 2054-55, compared with 122 centenarians in 1974-75.

Government spending on aged care has almost quadrupled since 1975 and is projected to almost double again as a share of the economy by 2055, according to the report, which is updated every five years.

To deal with the rising costs of a longer-living population, the government has proposed raising the retirement age to 70, the highest in the world. Under that plan, Australians born in 1966 or after will have to work until they are 70, from 65 now, before they can draw their government retirement allowance.

"By the middle of this century, it's expected that a child born will live to 100 and that's quite remarkable given that just over 100 years ago life expectancy was around 55,'' Hockey said March 5. "It is a dramatic change.''