Although the association between socioeconomic status and mortality is well documented, there is less work focusing on the association with morbidity in older people. This is partly due to the difficulties of measuring socioeconomic status at older ages. The work that does exist tends to use cross-sectional data and objective measures of socioeconomic status such as education, social class or income. However, these standard measures may be less relevant for older people. In this study, we explore the association between socioeconomic status and disability in older people using a range of individual, household and area level indicators of socioeconomic status, including a subjective measure of adequacy of income. We use cross-sectional data of 1470 participants aged 75 years or over on 31/12/1987 and registered with a UK primary care practice. Of these 719 participants with no disability at baseline were followed up until 2003 with measurements at up to seven time points to determine onset of disability. Disability was defined as difficulty with any one of five activities of daily living. In cross-sectional multivariate analysis, age, housing tenure, living status and a subjective measure of income adequacy were associated with prevalence of disability. In longitudinal analyses, self-perceived adequacy of income showed the strongest association with onset of disability; with those reporting difficulties managing having a median age of onset 80.5 years, 7 years younger than those who felt their income was adequate (median age 87.8 years). The prospective association between self-perceived adequacy of income and onset of disability decreased with age. This subjective measure of income adequacy may signify difficulties in budgeting, but could also capture differences in objective indicators of status not recorded in this study, such as wealth. Further work is needed to explore what causes older people to experience difficulty in managing their money and to understand the mechanisms behind its impact on their physical health.