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Aging is accompanied by unisensory decline. To compensate for this, two complementary strategies are potentially relied upon increasingly: first, older adults integrate more information from different sensory organs. Second, according to the predictive coding (PC) model, we form “templates” (internal models or “priors”) of the environment through our experiences. It is through increased life experience that older adults may rely more on these templates compared to younger adults. Multisensory integration and predictive coding would be effective strategies for the perception of near-threshold stimuli, which may however come at the cost of integrating irrelevant information. Both strategies can be studied in multisensory illusions because these require the integration of different sensory information, as well as an internal model of the world that can take precedence over sensory input. Here, we elicited a classic multisensory illusion, the sound-induced flash illusion, in younger (mean: 27 years, N = 25) and older (mean: 67 years, N = 28) adult participants while recording the magnetoencephalogram. Older adults perceived more illusions than younger adults. Older adults had increased pre-stimulus beta-band activity compared to younger adults as predicted by microcircuit theories of predictive coding, which suggest priors and predictions are linked to beta-band activity. Transfer entropy analysis and dynamic causal modeling of pre-stimulus magnetoencephalography data revealed a stronger illusion-related modulation of cross-modal connectivity from auditory to visual cortices in older compared to younger adults. We interpret this as the neural correlate of increased reliance on a cross-modal predictive template in older adults leading to the illusory percept.