The 1980's may be remembered as the decade of the older woman, due in part to demographics and also to public awareness heightened by the women's movement. If psychology is to exert a constructive force towards the optimization of mental health of older women, it is essential for psychologists to be aware of the limits of current knowledge and the role of stereotypes in shaping both knowledge and the lives of older women. Typical myths about older women focus on those dealing with financial status, institutionalization, mental and physical health, and sexuality. Individual differences among these women reveal the need for more diversity in intervention programs and more attention to individual needs. (JAC)