That is the warning from Nicola Brewer, chief executive of the Equality and Human Rights Commission.
She also said that those companies which held onto older workers with more experience would be better equipped to weather the economic downturn.
Talking at the Age Diversity in the Downturn conference, Ms Brewer said: "Embracing the skills of older workers should be a top priority – unless we are prepared to miss out on a third of the available talent pool."
She added: "The Commission does not accept that the recession means we have to slacken our search for fairness and flexibility. We cannot afford for the talent, skills and experience of older workers to be lost."
Alan Christie, policy director at the Commission, urged employers to "stop stereotyping" and look instead at what employees could offer to a company, regardless of their age.
The Commission recently issued guidelines to small firms to help them ensure they were following correct procedure when making redundancies.
