you are taking a pretty big risk. in a number of ways a bigger risk than he is.
first, like you said he's considerably older than you, so he's getting the better end of the bargain in that area. (even if he's hot...the fact remains)
second, he's the boss and this Will come into play at some point. in spite of what you currently think now, the odds of this affecting your job in some way when it ends are above 50%.
third. if he's suggesting such a thing with you how do you know he doesnt have these little liasons all over work, that would be a bit gross.
forth. you didnt say if he was married or not (if so...walk...no run)
fifth...while he SAYS it would be fine if one of you walked what he REALLY means is it would be fine if HE ended the FWB relationship. it WILL be an issue if YOU end it once it starts.
now you have to figure out a way to end it before it begins. with out it affecting your job already (you really did take a risk here!). Tell him you decided you cant be a FWB with him because you are too worried you might develop feelings for him. That while there are some people you CAN be an fwb with because you KNOW you wont become emotionally attached, you think you will with him! this will feed his ego while letting you walk away, HOPEFULLY with out any negative consequences.
it does, however, sound as if you have already kind of choosen to pursue this FWB thing with him. If at all possible try to avoid this!
let us know how this all plays out. what you decided and how he reacts and all.