Fluid intelligence peaks by the early 20s and then declines with age, so "age bias" is rational. When the law mandates non-economic behavior, some people will ignore the law.
Many of the intelligence studies that this myth were based on have been debunked. They were done in the 60s and compared young college students with a random sample of older people.
More recent studies have shown that, barring disease, there isn't a noticeable cognitive decline until well past 65 because experience more than makes up for declining abilities.
While, for most people there isn't a noticeable decline, some studies do show older people take slightly longer to make decisions, but the decisions are usually better/more accurate. However, this isn't noticeable in all but the most extreme situations (top tier competitive chess for example). Newer research shows that this extra time is probably a combination of conscious choice to trade speed for accuracy, and more available information to sort through.
What isn't great is a lack of variety. Why would you want everybody on your team to be the same type of person? You want everyone's abilities to be complementary, not identical.
'Fluid intelligence, like reaction time, typically peaks in young adulthood and then steadily declines. This decline may be related to local atrophy of the brain in the right cerebellum. Other researchers have suggested that a lack of practice, along with age-related changes in the brain may contribute to the decline.'
edit: A lot of people are beaten down by the time they're in their 40s. They feel like failure and they've lost hope, or they're stuck in a game of Prisoner's Dilemma. Those people aren't as smart as they were back when they were making the mistakes that led to their sorry state.