In Europe the current financial strain on governmental budgets is set to worsen as our ageing population increases over the next 40 years. This coincides with an increase in mental health problems, particularly depression. Depression affects between 20–40% of the elderly population and costs are increasing each year. As the ageing population grows, our current diagnostic and treatment procedures need to be re-evaluated so that we can ensure our health systems can continue to promote patient health without incurring larger debts. A significant proportion of costs are as a result of missed early diagnoses leading to more hospital admissions and associated diseases. Complications of diagnosis are patients’ current co-morbidities, somatisation and pressure on physician time. Some of these problems could be overcome with screening programmes in care settings. Early diagnosis promotes early treatment. Currently anti-depressants are the most widely used type of treatment; they are well validated and cheap to prescribe. Newer research shows that anti-depressants when combined with psychotherapy are superior to medication alone and cost-effective group computerised psychotherapy has been proven to work in the elderly population. Other newer treatment options such as the promotion of spiritual well-being also look promising, with studies showing correlations between good spiritual health and lower depression in the elderly. More research that focuses on cost-effective treatment is needed for governments to make informed choices for the future.