Age discrimination in the workforce needs to end to combat a growing aged pension crisis in the country's oldest regions, according to the Regional Australia Institute.
A RAI report has found there is lower growth, lower incomes and a higher welfare services bill in aging regions which are increasingly reliant in the pension.
The report said some regions, including Victor Harbor, Port-Macquarie-Hastings and East Gippsland, already had more than 20 per cent of their populations reliant on the age pension.
The 2016 census showed while aging was stable in metropolitan cities, it is accelerating in many regions, particularly rural areas and coastal communities.
The aged pension is already the largest expenditure item in the Federal Budget at $45 billion annually, and if nothing changes, it is forecast to blow out to $51 billion by 2020.
The report said raising workplace engagement among older workers was an effective way to offset negative economic impacts of an ageing population.
RAI chief executive Jack Archer said attitudes towards older workers needed to change or regions risked stagnating, with older workers often facing discrimination. .
"Frankly [regions will] struggle to grow and they will be increasingly reliant on government benefits for local incomes," Mr Archer said.
"They risk losing their independence if too much of the population relies on the pension.
"I think the starting point at the moment is that you're better off having younger workers ... it's all part of a broader, costly attitude in society about what older Australians can bring to society.
"Maybe that's an overhang from when jobs were more likely to be highly physical."
The report said if older employment increased across regions like Hume, spending in those local economies could be boosted by $30 million each.
Age Discrimination Commissioner Kay Patterson said many older Australians who were willing to work were often overlooked as candidates.
"It is important that society push back against discrimination, and allow older people a place in the national workforce so they too can enjoy the dignity, purpose and independence that work brings," she said.
Mr Archer called on governments to engage in more comprehensive regional trials of incentives, tailored to specific regions, which would better engage people in the 55-64 year old age group.
He said employment services could prioritise older workers and schemes such as pensions work bonus should be considered, as well as testing rules around superannuation.
"I think if we can identify a group of older people in the community who would like to work and see how we can connect them to local opportunities," Mr Archer said.
"There's an incredible amount of experience in the 55- 64 age bracket ... we need to know how to tap into that experience and maybe pair them up with younger workers.
"We don't yet know how to deal with the impacts of a really aged workforce.
"We say let's test the options in the places already experiencing the issues, help them to make progress and prepare Australia properly for the wider crisis that is coming nationally."
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