Story highlights A new study predicts Japan's population will be at about 86.7 million by 2060

That's down dramatically from Japan's current 128 million people

People 65 and up will total nearly 40% of Japan's population in 2060, the study says

Japan's population will shrink by a staggering 30% by 2060, according to a new estimate by the country's government.

The current population will shrink from the current level of 128 million to 86.74 million, as the graying nation's aging accelerates and the birthrate continues to stay low.

The Ministry of Health, Labor and Welfare's research organization released the data on Monday. The group, called the National Institute of Population and Social Security Research, provides a 50-year demographic forecast every five years.

The institute also projects that people age 65 and older will account for 39.9% of the total population in 2060. In 2010, the elderly accounted for 23% of the population.

The country's average life expectancy dipped in 2011 after the March earthquake and tsunami, which killed approximately 19,000 people.

But the institute expects the upward trend for life expectancy to continue. By 2060, the government projects women will live until 90.93 years and men 84.19 years.

The fertility rate, which is currently at 1.39 per woman, will continue to fall, says the institute. The rate by 2060 is expected to fall to 1.35 in 2060. The country's population decline would slow if the birth rate rose to 2.07.