We examine prevalence of four compensatory strategies (assistive devices, receiving help, changing frequency, or method of performance) and their immediate and long-term relationship to well-being. A total of 319 older adults (>70 years) with functional difficulties at home provided baseline data; 285 (89%) provided 12-month data. For 17 everyday activities, the most frequently used strategy was changing method of performance (M = 10.27 activities), followed by changing frequency (M = 6.17), assistive devices (M = 5.38), and receiving help (M = 3.37; p = .001). Using each strategy type was associated with functional difficulties at baseline (ps < .0001), whereas each strategy type except changing method predicted functional decline 12 months later (ps < .0001). Changing frequency of performing activities was associated with depressed mood (p < .0001) and poor mastery (p < .0001) at both baseline and 12 months (ps < .02). Findings suggest that strategy type may be differentially associated with functional decline and well-being although reciprocal causality and the role of other factors in these outcomes cannot be determined from this study.