The number of over 65-year-olds working has increased to more than a million since the coalition came to power, according to research.
Saga said there had been a 36% increase since May 2010, to 1.09 million, partly following the abolition of the default retirement age.
The number of 50 to 64-year-olds in work has jumped from 7.2 million to just under eight million in the same period, a rise of 9%.
The over-50s group said the number of older workers has been steadily rising for years.
Paul Green, Saga's director of communications, said: "Thanks in part to the abolition of the default retirement age, many more older people are able to continue in work for as long as they choose to do so, rather than at the whim of their employer.
"However, this good news masks the misery that long-term unemployment causes and more needs to be done to help. Recent changes were made by government which removed employers' national insurance for employing younger workers. By extending this further to encourage employment of those in long-term unemployment, it could encourage more employers to take a chance on those who have been out of work for some time, but who are desperate to get back into the workplace.
"We need to stop writing older workers off simply because they have found themselves out of work at an older age, and start making the most of the invaluable skills and experience many have to offer."
Saga said 3.6% of all employed people in the UK are 65 or older, up from 3.4% a year ago.
Economist Dr Ros Altman, recently appointed as Business Champion for Older Workers, said unemployment among 50 to 64-year-olds has fallen more slowly than for younger workers.
She said it suggested the over-50s were finding it more difficult to get back to work, with employers and recruitment agencies focussing on hiring young people.
Ms Altman said that in her new role she hoped to identify any significant barriers and help more over-50s stay in or return to work.
Pensions Minister Steve Webb said: " All the evidence shows that helping people in their 50s and early 60s to stay in the workplace is essential - not only for their own long-term financial prospects but also for the wellbeing of the economy as a whole.
"If business fails to wake up to the undeniable shift in demographics, then our economy will contract, employment will fall and workers of all ages people will suffer.
"We have already ended the default retirement age - making it illegal to sack a person simply for turning 65 - and we are now ensuring support is in place to help older workers and ultimately build a fairer and stronger economy."