Taking away people's autonomy as to when they retire and forcing them to work until 67 to qualify for a government pension could be doing damage to their health and wellbeing.

With debate current about who should pay for Australia's aged care burden, a study has found people more likely to experience all the benefits of retirement have been able to make the decision to stop work earlier.

But only 30 per cent of Australians can afford to retire before they are eligible for a pension, according to Dr Rong Zhu, a senior lecturer in economics at Flinders University College of Business, Government and Law.

"We need to consider the unintended consequences of delayed retirement for health and wellbeing via a reduced sense of internal locus of control," he told AAP.

"If workers work beyond retirement age, they are less likely to consider life outcomes as a result of their own choices and actions."

This can impinge on all the benefits workers might otherwise get to look forward to at that stage of life.

"Our paper shows retirement significantly improves older people's physical and mental health as well as their subjective well-being as measured by life satisfaction," Dr Zhu said.

"One third of the positive impact of retirement on health and one fifth of that on wellbeing can be explained by the retirement-driven increase in internal locus of control.

"Facing an increased eligibility age for the age pension, if an older person defers retirement, then the health and wellbeing benefits associated with retirement also come at a later date."

The increase in the retirement age to 67 for men and women can be tough, when they might have been enjoying the benefits of retirement a lot earlier, he added.

Australia's public pension take-up rate is the second highest in all of the OECD countries, with about 70 per cent of retirees receiving either a partial or full payment.

But a recent review into the aged care system found within the next 40 years, the proportion of people accessing the pension will decline by about 15 per cent, with the overall wealth of older Australians to rise thanks to increased superannuation and assets.

The government-commissioned Aged Care Task Force has recommended richer baby boomers should contribute more to aged care to take pressure off the federal budget and allow more support for those with limited means to access residential and in-home services.

The government funds about 75 per cent of residential aged care and 95 per cent of home care costs.

Reforms are needed to make the system more sustainable, according to task force member and former NSW premier Mike Baird.

"There are constraints and demands across all parts of budget," he said.

"Asking those who have the means to contribute more is a logical step and having a safety net for those that don't have the resources also provides some protection, so it's a good balance."