Can I apply for a Non-O visa while holding a non-immigrant B visa and extension of stay based on employment?

You are misunderstanding a bit.

You are on a yearly extension based on employment/teaching, not the first 90 days from the visa itself, is it correct?

Then, You can apply for 1-year extension based on retirement immediately AFTER you cancel your current extension based on employment/teaching and work permit with the termination letter from your employer/school. This is "change the reason of extension".

You can apply for cancellation of extension and WP in advance effective date is the end of your job. Then you may want to apply for a new 1-year extension based on retirement on the last day of your stamp because usually, an extension with a different reason will start on the day of application (but of course, you can talk with your local immigration office in advance if you can do earlier). When your retirement extension starts, if it's earlier than your last date, you can no longer work legally. That's why you may want to go to the last day to apply for new one.

IF you are still on the first 90 days from the non-B visa, you need to leave Thailand and enter on tourist status to apply for Non-O or get one from the consulate. I don't think it's your case.

Okay IF I was a betting man I'd bet you don't hold ANY Non-Immigrant type B VISA and instead if you looked at the stamp in your passport you would see you have an 'extension of stay permitted until" stamp with a date on it.

IF in fact that is what you have (an extension of stay) you don't need to apply for a Non-O anything 😮 Nor do you need to bounce out and back, to get on a free entry stamp (which is NOT a 30 day tourist visa 😕 , just a free entry).

What you CAN do is just cancel your extension based on employment and immediately apply for a NEW yearly extension based on being over 50 (retirement) by meeting the proof of funds, turning in the required documents etc.

You're ONLY doing a "reason change" switching from one extension to another (one based on employment to one based on being over 50).

SO go to the Chiang Mai immigration office, on the wall is posted the requirements for a year extension of stay based on being over 50 (retirement),

Get those documents together, TM30, lease, map, bank letter, updated bank book, TM7 form, blah-blah-blah.. THEN cancel your work permit,

Get the documentation from your employer that says you stop on xxx date, go a week or so before that date, cancel the extension and immediatelly apply for the new year extension based on retirement for 1900baht.

That's how it works out when you're on an extension of stay and want to change the reason for being here. People ALL over thailand cancel extension based on employment and apply for new extensions right then based on marriage to a thai or retirement <- that's what you're doing..