New Zealand needs to tap into the economic potential of the retiring baby-boom generation if it is to offset the cost of supporting them, a new report says.

The Ministry of Social Development document says within 40 years nearly a quarter of our population will be of retirement age, an enormous financial burden on the nation.

But it outlines two key ways of counteracting that: increase the number of over-65s who choose to keep working, and better target this well-heeled retiree consumer market.

The baby boomers will be healthier, better educated and have more spending power than any other post-65 New Zealand generation, it said. By 2051, 23 per cent of the population will be over 65 - up from today's 13 per cent - with 41 per cent of them aged 80-plus.

At the same time fewer younger people are coming through, meaning total workforce size is expected to decline from this year. Encouraging older, skilled people to keep working is one way of addressing this, the ministry says.

The notion of retiring at 65 is changing, with more people continuing in paid work after their first superannuation cheque. In 1991, 25,000 over-65s were still working, but that had risen to 62,000 by 2006. In 20 years, the number should be 240,000, the report said.

Today, about 3 per cent of the total labour force is over 65. That figure is forecast to grow to 7-10 per cent by 2051.

But to maximise older workers' potential, the country needs to improve their opportunities, the report says. Inflexible work arrangements, discrimination and poor health are key barriers, and government, employer and employee groups will need to develop policies that address these issues.

Building on existing skills, a flexible workforce and improved workplace practices "will be critical tools for managers facing population ageing in their industries", it says.

On the other side of the ledger, the new generation of retirees has enormous spending power. People aged 65-plus will spend $10.9 billion this year. That figure will rise to $45 billion in 2051, the report predicts.

But work is needed on how to market to specific segments within this group, the ministry says. The tastes of our parents and grandparents will not necessarily predict the demands of older baby boomers: "The economic potential of the older market will not be realised if businesses marketing to the new generation of older people target them as a homogenous group."

Kate Ross, of recruitment agency Kinetic, says there are now skills shortages again and recruiters are "crying out" for people. Employers are adapting to that, but it doesn't have anything to do with age, she says. While some 65-year-olds are young at heart others dislike change, and it is about having the attitude and skills set: "If you fit that box then there's no reason you can't get the work."

Jeff McDonald, client solutions manager at recruiter Ranstad, says older workers are more loyal, take fewer sick days and offer experience.

"[But] we want to have these people embracing new technology, new ways of working, and being mindful we're constantly going through a period of change."

The situation presents a unique opportunity for employers, he says. "If companies can do this successfully they can do very well out of it."

Richard Poole, co-founder of website, says there is a general feeling among his 45 to 65-year-old audience that "there needs to be more recognition that they've got lots of good years left".

Significant change in the attitudes of marketing managers and advertising agencies has occurred in the past 12 to 18 months, he says.

Apart from the marketing of obvious products such as retirement homes and travel, there had been an unwillingness to consider older groups. "The main theme was like 'it's not going to be cool if we're seen to be marketing to people over 50, it may damage our brand'. It's just an awakening, really."

Retirement not in plans

Reaching her 65th birthday certainly did not mean retirement for Liz Allen.

She continues to work part-time in accounts for a central Auckland firm, with no intention of stopping.

"I just couldn't do it, sit around all day and watch television."

Working keeps her active. "You're still interacting with people and there isn't any reason to [stop]. The whole concept of retirement to me is pretty foreign."

To those who say the retiring baby boomers will be a huge economic burden, her answer is this: "Don't write us off, because we can keep working."

As well, many retired people also give back by volunteering, says Allen, who helps arts organisations.