Experts are predicting an unprecedented surge in dementia sufferers in Australia, to double from about 230,000 last year to 465,000 by 2030. The figure could soar to 730,000 by 2050.
The report by Access Economics warns of a huge shortage of both professional and unpaid family carers.
Alzheimer's Australia that had commissioned the report said the public health system would not be able to cope with the projected increase.
Glen Rees, chief executive of Alzheimer's Australia, told ABC News, "Those beds that exist in hospitals in residential care will be harder and harder to access; the wrong people will be in them.
"The better approach would be for governments now to realise that support for carers good community care will in the end lead to more cost-effective and quality of life solutions.
"If the Government starts thinking now about the community services it needs, the residential care services it needs and support programs for carers into the future, we believe that the problem could be manageable," he said.
Kaye Pritchard's husband, David, was in his early 50s when he first felt the effects of the onset of dementia.
By the time he was diagnosed 11 years ago, he was just 55.
"It's a really difficult issue for many people, I consider myself lucky," she said.
"I think there are many others out there in the community who are doing things a lot tougher than I am. It's a very difficult situation and for the length of time that it has been for me has meant a significant impact on my being able to plan for my future.
"I had to cut down to part-time work, I've had to give up my career, so to speak. It wasn't only his future that was affected, it was the future of the whole family and long into the, you know, who knows where."
Alzheimers Australia labels cases such as this one as contributing to the 'dementia tsunami', a reference to the ageing baby boomers who are living longer but who are increasingly needing care in the home and sometimes outside the home. The organisation has called on the federal Government to consider setting up new ways to help pay for retirement care, such as special accounts for individuals to save money during their working lives.
The former New South Wales deputy premier, John Watkins, is now head of Alzheimer's Australia in that state.
He says the Government must act now to address the huge financial impact that dementia will have on the economy.
"It's an extraordinary situation we are facing, Australia has never faced a social health issue like the threat of dementia before," he said.