Does your alcohol tolerance level decrease as you age?

Not with age. Tolerance for any drug increases as you take more of it. The reason why old alcoholics can drink more is because they have spent far too many years drinking too much. Tolerance is not a good thing. It forces you to drink more and more, causing more and more damage to your body in the process.
Yes. The aging brain is more sensitive to alcohol, and decreases in the ability of the body to metabolize alcohol occurs with age as well. In addition, older people often lose weight, and alcohol goes further in smaller people, as well as women where there is more body fat, with the alcohol concentrating in the body's water compartment.