The Government says it wants to get the economy into surplus before it turns to planning for the so-called silver tsunami.
The Aged Care Association is calling for the Government to move fast to cope with an increasingly ageing population.
Minister for Senior Citizens Jo Goodhew says the figures are no surprise and the Government is focussed on getting back into surplus before it invests more in health services for older people.
Ms Goodhew says older people are living longer but also staying in the workforce longer and the average age of someone in a rest home is 84.
New figures show there are now more than 600,000 people over the age of 65.
Statistics New Zealand estimates in the next 40 years, the number of those over 80 will pass half a million.
Aged Care Association chief executive Martin Taylor says the Government must re-think asset testing thresholds, superannuation eligibility and taxation levels.
"Is somebody coming to aged residential care; should they be able to keep $500,000 in the bank or $200,000; should people be able to retire at 65 or work at 65 and still get superannuation - is that sensible, is that realistic?"
Mr Taylor says the Government needs to start focusing on the big picture before it is too late.
Age Concern chief executive Ann Martin says it is unfair that older people are often considered a burden on society.
"It's discounting all that the older people are continuing to do - even just by living and spending their superannuation, they are contributing to the community. But they're doing so much more than that."
Ms Martin says older people make a major contribution to their communities, including voluntary work.