This article focuses on everyday cognitive competence as a critical aspect of functional health. Everyday cognitive competence is defined as the ability to perform adequately those cognitively complex tasks considered essential for living on one's own in this society. A major challenge for those involved in assessment and judgment of competence is to define the critical domains of functional abilities associated with living independently. Prior research on the instrumental activities of daily living (IADLs) may be particularly useful. Findings from our research on a measure assessing everyday cognitive competence within each of the IADL domains are presented. Elderly persons' performance on the measure of everyday cognition relate to behavioral observations of those subjects performing similar activities in their home and to self and spousal IADL ratings. Seven-year longitudinal data indicate that there is relatively modest decline in performance on cognitively complex everyday tasks during the 60s, but that steeper patterns of normative decline are found in the late 70s and 80s.