Speaking during his final appearance in the House of Lords, Dr Rowan Williams said there was a misconception that older people are a "burden".
"As things stand, more than half the over-60 population are involved in some sort of formal and structured voluntary work," he said.
"Over half of the population believes that this is part of what they should aspire to in later life, and a third are willing to take part in informal volunteering.
"These facts are of basic importance. It means, quite simply, that a majority of the older population are ready to do what they can, unpaid, to support the fabric of society; they are doing exactly what we expect responsible citizens to do."
Where older people find their physical independence reduced, they should be supported to enable them to continue making a valuable contribution to their communities, the Archbishop said.
"We should see questions of dependency as basically about how our public policy and resourcing seeks to preserve both dignity and capacity among those who may be increasingly physically challenged but remain citizens capable of contributing vital things to the social fabric," he said.
Dr Williams said that churches and faith communities have a key role to play in helping different generations engage with each other, such as through befriending schemes involving school pupils or oral history projects.
He noted that this was becoming more important "as family structures become looser and more scattered geographically".
The Archbishop went on to challenge the way in which a large part of the prevailing culture is "frenetically oriented towards youth", especially in entertainment and marketing.
While he said this was understandable up to a point, he warned that it could cause society to overlook responsible and active people in older life "who are still participants in society, not passengers".
"We tolerate a very eccentric view of the good life or the ideal life as one that can be lived only for a few years between, say, eighteen and forty," he said.
"The 'extremes' of human life, childhood and age, when we are not defined by our productive capacity, and so have time to absorb the reality around us in a different way – these are hard for our society to come to terms with."
He concluded: "The recovery of a full and rich sense of dignity at every age and in every condition is an imperative if we are serious about the respect we universally owe each other, that respect grounded for Christians in the divine image which is to be discerned in old and young alike."