A report into youngsters not in education, employment or training (Neet) said help for 19-24 year olds was not as good as for 16-18 year olds.
The Wales Audit Office (WAO) urged the Welsh government to get the best value from £200m spent on Neets in a year.
Deputy skills minister Ken Skates said more work would be done to share best practice and track progress of schemes.
The report found that between 2008 and 2012 the proportion of 16-18 year olds classed as Neet fell from 12.4% to 10.2%, around 11,600 young people.
But for 19-24 year olds it rose from 17% to 23%, a total of nearly 60,000 young people not working, training or studying.
Many of these older Neets had family or caring responsibilities or a long-term health problem or disability, the report found.
It also noted that the Welsh government’s strategy to tackle Neets was focused on the 16-18 age group, but that research had shown that positive results for 18-year-olds did not always carry over into their early twenties.
Swansea and Wrexham councils were praised for their success in engaging with young people at risk of becoming Neets, including gathering data to identify trends, mapping the provision of services, and giving extra support for young people with additional needs.
The report made a number of recommendations for the Welsh government:
- Work with partners to map and review the resources required to achieve its goals
- Closer work with the Department for Work and Pensions, which plays a more important role with the older age group
- Focus on young people most likely to become Neets, including young parents and young people with disabilities or chronic illnesses
- Councils and partners to adopt the same targets as the Welsh government
- Evaluation of schemes in order to share good practice and establish value for money
Steve Martin, the national studies project manager for the Wales Audit Office, said the Welsh government needs to be clearer about how it will help the older age group of 19-24 year olds, who were more likely to be looking for employment.
He told BBC Radio Wales: “The Welsh government has had some success with Jobs Growth Wales, for instance, with engaging with employers but some of its policies are looking at young people who are likely to do quite well anyway.
“It just probably needs to focus on those that need the extra help.”
Ken Skates, deputy minister for skills and technology, said he welcomed the acknowledgment of the progress being made with 16-18-year-olds.
“We recognise that young people 19-24 still face significant challenges but we’re doing all we can to help them,” he added.
“A number of the recommendations within the report have and will continue to be addressed during the [Youth Engagement and Progression] Framework’s implementation, including a formal evaluation to track progress and share best practice amongst local authorities.”