Aging is often associated with a decrease in cognitive capacities. However, semantic memory appears relatively well preserved in healthy aging. Both behavioral and neuroimaging studies support the view that changes in brain networks contribute to this preservation of semantic cognition. However, little is known about the role of healthy aging in the brain representation of semantic categories. Here we used pattern classification analyses and computational models to examine the neural representations of living and non-living word concepts. The results demonstrate that brain representations of animacy in healthy aging exhibit increased similarity across categories, even across different task contexts. This pattern of results aligns with the neural dedifferentiation hypothesis that proposes that aging is associated with decreased specificity in brain activity patterns and less efficient neural resource allocation. However, the loss in neural specificity for different categories was accompanied by increased dissimilarity of item-based conceptual representations within each category. Taken together, the age-related patterns of increased generalization and specialization in the brain representations of semantic knowledge may reflect a compensatory mechanism that enables a more efficient coding scheme characterized by both compression and sparsity, thereby helping to optimize the limited neural resources and maintain semantic processing in the healthy aging brain.