Almost 250,000 more people over the age of 65 have stayed in work since the default retirement age was abolished three years ago, according to figures.
There are now more than 1.1 million workers over 65, said the Department for Work and Pensions, adding that an average earner working one year longer can boost their pension pot by around £4,500.
Research has also shown that the country's economic output could increase by 1%, or £16 billion, if everyone worked one year longer.
Pensions minister Steve Webb said: "In years to come, we'll look back at the kind of age discrimination that the default retirement age represented and wonder how it was ever allowed. Forcing people to retire at 65 might have made sense in 1925 but in the 21st century it was nothing short of an outrage.
"We have to wake up to the needs and expectations of today's workforce - 30% of whom are now aged over 50 and one million over 65.
"These people have a massive role to play in our economy and society and many quite rightly want to carry on using the skills and knowledge they have honed over decades and also pass them on to younger colleagues."
Saga's director of communication Paul Green said: "The abolition of the default retirement age has had a huge, and incredibly positive impact on the lives of many over 50s. Rather than being turfed out of the work place due to an arbitrary age limit, employers now have to be more flexible and allow for a period of part-tirement, where people can balance the desire to retire with the need to continue working.
"Our research has shown that 40% of those who feel they need to work past state pension age are planning to reduce or change the number of hours they work, and for many this is because they simply enjoy working. However, there are also a large number of people who feel forced to do so as a result of pensions not meeting their expectations."