A generation of pensioners face lives of poverty and loneliness, without enough money even to heat their own homes, says the first report on life for the over-60s in austerity Britain.

The future for many of the country's older people is bleak, according to the Age UK report Agenda for Later Life, to be published this week. Sixteen per cent, or 1.8 million, of people over state pension age are living in poverty; 3.3 million are unable to warm their homes (an increase of more than half a million in the past two years); and 800,000 are not receiving the care they need.

Age UK's charity director, Michelle Mitchell, called the report "sobering" and said it will "stop people in their tracks". More than 30 per cent of over-65s said they find it hard to get treatment from their nearest hospital, nearly a quarter struggle to get service from a bank, and 6 per cent leave their house once a week or less, the report reveals. More than 60 per cent of people think age discrimination is widespread in Britain, Age UK found.

"The older population is the fastest-growing, with 14.1m people over 60. This number is greater than the under-16s," Mrs Mitchell said, adding that inequality among the older population has increased, with the gap in average life expectancy between the best and the worst areas now standing at almost nine years. "For some, later life is a time of enjoyment – many are living into their 80s and 90s in good health, with increasing numbers working later in life. But for others, it is a time of poverty, isolation and loneliness. Almost two million older people are living in poverty, and millions more are living below the breadline," she added.

An estimated one million over-65s are malnourished, according to the report, which calls for the coalition to draw up an "overarching framework" of policies prioritising older people. It proposes a "simpler" state pension of at least £140 per week; a fuel poverty strategy to support the most vulnerable households; tightening up of anti-age discrimination laws; and wholesale reform of support and care services so that no one would have to pay more than £35,000 for care bills during their lifetime.

Campaigners will express their concern and highlight the need for action on Tuesday when hundreds of older and disabled people are expected to join a mass lobby of Parliament, organised by the Care & Support Alliance (CSA), to urge the Government to reform and boost funding for social care. While the number of people aged over 85 – the age group most likely to need care – has grown by 300,000 since 2005, funding has fallen by £300m in the past 12 months, and, according to Agenda for Later Life, the "level of unmet need will only increase" in the next few years.

Steven McIntosh, the policy manager at Carers UK, which is a member of the CSA, said there was "mounting evidence that the care system is in crisis" and "worsening" under this Government. His view echoes an inquiry by the Equality and Human Right Commission last year, which revealed that care for older people in their own homes was so poor that, at times, it breached human rights. The CSA wants the Government to set aside an additional £5bn of funding for support services. Over the past three years, there has been a £360 increase in the amount councils charge annually for home help, says Age UK, which is calling for full implementation of last year's Dilnot Commission – including a big increase in the limit of savings and assets above which the state offers no help with care costs. It says the threshold should rise from £23,250 to £100,000.

Paul Burstow, the care services minister, said older people should get the high-quality care they expect: "We know that reform of the care and support system is needed. That is why, following the Dilnot and Law Commission's reports, we have been working with organisations such as Age UK to create a sustainable care system. Our goal is a system that delivers integrated care and gives more choice and control to individuals and their carers."

He added that the Government would be publishing a White Paper on care and support, as well as a progress report on funding and reform, in the spring.

Mrs Mitchell said Age UK was "broadly supportive" of the Government's plans to reform healthcare under the NHS, but added that she was "very concerned" about the "uncertainty that is clearly systemic in the health system at the moment".

Poverty

Pensioner Mary Phillips, 76, lives on her own in a council flat in south London. A former proof-reader, she says her pension credit and housing benefit were cut when she took a three-month part-time job at a sixth-form college last year. Her utility bills have increased by almost £20 in the same period and she worries about whether to "heat or eat"

"The job I took only bought in £1,000, but I lost £16.90 a week pension credit and £81.60 a week in housing benefit. I also had to pay £400 in council tax; I only have £2,500 in my savings. Over the cold period, I had to put my heating up, but I was worried that it would cost me lots of money. I have started to buy cheaper things; I get the bus to the market and buy food there – some of it's edible, some of it's not, but it's less expensive than the supermarket.

"I definitely feel like I'm getting a raw deal. Since they stopped my housing benefit and I have had to pay council tax, I have to pay for my own dental treatment. It's like the more that's taken away, the more you have to pay. I just want a bit of a rest and not to have to worry about things. I also worry that, if the Government decided to start chucking people out of council housing when they have an extra room, my family wouldn't be able to come and stay. It's as if we aren't human beings."

Sarah Morrison

Employment/discrimination

Knud Muller, 69, a former local government statistician, lives with his wife, Liz, in Stoke-on-Trent. Under the previous male default retirement age, he was forced out a job that he'd held for 33 years. This, he says, was a result of "age discrimination"

"I was told, more or less, to 'shove off'. In the first few months, I applied for a few jobs similar to mine. There was an advert for a job with my employer – I applied and wasn't even given an acknowledgement. I applied for others and didn't get anywhere. Things are tighter now. I supply a bit of information to the local papers about house prices. I'm trying to see how I can make more money from it. There are so many perks to being employed – for example, when you're at work you don't need to heat your house."

Sarah Trotter

Health/support services

David Gower, 76, a retired British Rail technical manager, lives on his own in sheltered accommodation in the Home Counties. He has a severe neurological condition, which affects his mobility and means that he is reliant on four carers to help him four times a day. He struggles to pay his costs, which have increased from £260 to £370 a month

"I can only manage a few steps with a walking frame and it is hard for me to do even the simplest tasks like picking things up or opening an envelope. My local authority has already had to pare down my home care service as much as it can. I don't feel mine is adequate. The carers are already hard pushed to get me out of bed, washed, toiletted, dressed and breakfasted, and the bed made, in the allotted 45 minutes. It's a double whammy – a reduction in carer time and a big increase in what I pay for it. The Government's not fulfilling its responsibility to people who need support."

Louis Supple

Article fmo the Independent