Ros Altmann, a pension’s expert and governor of the London School of Economics, told The Daily Telegraph: “We’ve had years to prepare for this demographic time bomb, but unfortunately over the last decade or more, the Government has systematically undermined pension saving and failed to prepare us properly for what’s coming.

“Public sector workers have seen little or no change in their generous pension provision while the rest of the work force faces the prospect of struggling to survive on just about the lowest state pension in the developed world and nearly half will need to claim means tested handouts to avoid penury.”

Older workers can be forced to retire, but the new Government which has said it wants to phase out the default retirement age.

The study comes amid calls from economists to raise the state pension age to 70 to help pay for state pensions, reduce the public debt and reflect people living longer.

Official figures suggest almost 1.5 million people above the standard retirement age are currently working, a total of 12 per cent of all workers and an increase of 78,000 in the past year.

It is the biggest increase among all the age groups in the data provided by the Office for National Statistics.

Experts explained some workers also want to work beyond the existing default retirement age because of the social and emotional benefits

Clive Bolton, a director for Aviva Life, said: “Keeping minds active, staying out from under their partner’s feet and enjoying social interaction appear to be real benefits that are pushing people to keep working. Gradual or part-tirement appears to be a very real choice for many older people rather than the traditional rigid retirement age.”