Players do start to decline very rapidly in-season by age 38 (some start earlier, but 38 seems to be absolute drop-dead point for everyone).
That said, this guy in question is clearly a superior player and should remain highly effective this year and be very good next year, but I would give him a mutual option for the last year. He will almost certainly not be worth $10 million at that point, so think of the $2.5 million you'll owe him then as a signing bonus.