As the federal government moves to extend the retirement age to 70, government data shows there was a 30 per cent increase in the number of people claiming the Australian age pension living overseas between 2007 and 2012.

Over the same time, the total number of age pensioners grew only 17 per cent.

There are 2.3 million people receiving an age pension, a figure that is steadily climbing as the population ages. About 3 per cent of these pensioners live overseas.

The government slashed $2.1 billion from pension spending in last month's budget.

The pension qualifying age will be lifted from 67 to 70 by 2035. And from 2017, pension rises will be pegged to the consumer price index, and the value of income test and assets test free areas will be fixed for three years.

Italy and Greece are the two most popular destinations for Australian pensioners relocating abroad. This reflects the ageing of the wave of southern European migrants who arrived in Australia after World War II.

University of South Australia researcher Peter Winwood said many people retiring now had inadequate funds to finance their lifestyle. The superannuation levy came in part-way through their working lives, and the current pension rate of 50 per cent of average weekly earnings was only slightly above the poverty line.

''People retiring now, or in the next two years, the baby boomers, are going to have inadequate finances,'' said Dr Winwood, who has researched how people plan to fund their retirement.

''If they are faced with the situation of being unable to fund their retirement in Australia, they might be tempted to go back to the old country where they have family and friends and they have better prospects for their future.''

People are often being forced out of the workforce earlier than they would like and before they have adequate retirement savings.

Roy Craney decided to move overseas when he struggled to find work in his chosen field of hospitality management once he reached 55. He cashed in his superannuation and moved to Thailand nine months ago. He hopes that the relatively cheap cost of living there will ensure his super lasts until he qualifies for the age pension at 67.

''I'm an economic refugee,'' Mr Craney said. ''I can have a more comfortable lifestyle here than I had back in Australia. I was going through my savings too quickly.''

Mr Craney, who lives in Udon Thani in north-east Thailand, believes more Australians will be forced to follow in his footsteps.

He said he had met at least 50 expats who had relocated to Thailand for the same reasons as him.

''It's an economic decision,'' Mr Craney said.

''They found they couldn't survive in their own countries on the money they had. It's a situation they didn't expect to find themselves in.''

Mr Craney believes the recent budget decision to raise the pension age to 70 will only make it harder for older workers unless the government does more to tackle aged-based workplace discrimination.

''If I can't get a job at 55 what is supposed to happen? Do they want me to sit on the dole until I turn 70?

''We're going to have a new generation of older dole bludgers and it's not by choice.''