In most everyday settings, speech is heard in the presence of competing sounds and understanding speech requires skills in auditory streaming and segregation, followed by identification and recognition, of the attended signals. Ageing leads to difficulties in understanding speech in noisy backgrounds. In addition to age-related changes in hearing-related factors, cognitive factors also play a role but it is unclear to what extent these are generalized or modality-specific cognitive factors. We examined how ageing in normal-hearing decade age cohorts from 20 to 69 years affected discrimination of open-set speech in background noise. We used two types of sentences of similar structural and linguistic characteristics but different masking levels (i.e. differences in signal-to-noise ratios required for detection of sentences in a standard masker) so as to vary sentence demand, and two background maskers (one causing purely energetic masking effects and the other causing energetic and informational masking) to vary load conditions. There was a decline in performance (measured as speech reception thresholds for perception of sentences in noise) in the oldest cohort for both types of sentences, but only in the presence of the more demanding informational masker. We interpret these results to indicate a modality-specific decline in cognitive processing, likely a decrease in the ability to use acoustic and phonetic cues efficiently to segregate speech from background noise, in subjects aged >60.