A joint working party has met at least twice this year and the trustee boards of both charities are expected to make a final decision at their meetings in November.
A confidential Age Concern document, seen by Third Sector, says the meetings have established broad consensus on what a merged organisation would do. Its vision would be "a world in which older people flourish".
But the document says potential obstacles include differing approaches to governance, persuading the wider Age Concern federation of the benefits, and questions of costs and savings.
It warns: "The power of the status quo, allied with organisational pride, has been a stumbling block before, where there was concern that a merger may result in two successful organisations being replaced by one less successful one."
But it goes on: "The interests of older people may not be best served by two organisations that are often in collaboration but sometimes in competition with each other. It is likely that competition will increase in future in a variety of areas - for example, in service delivery or international work.
"There is reputational risk in being seen to have backed off - again - from a merger. Nonetheless, there will inevitably be continued pressure from patrons, parliamentarians and funders to merge, and associated distraction from getting on with the work. The issue is unlikely to go away."
The document says the next steps should include work on governance, decisions about which existing activities of the two charities should continue, and due diligence on pensions, contracts with third parties, liabilities and leases.
The contracts question is likely to include Heyday, the struggling Age Concern offshoot for the over-50s launched in May last year, which has absorbed more than £16m, including £5m of the charity's reserves. It has contracts with various suppliers, including IBM.
Another issue will be the leadership of a merged organisation. Gordon Lishman has been director general of Age Concern England for seven years; Michael Lake has had the same title at Help the Aged for 11 years.
Age Concern's income last year was £81.9m, Help the Aged's £73.9m. A joint statement said discussion was taking place in an open way: "Whatever the outcome ... both charities will continue to work in cooperation together in the future."