On the beautiful Golden Pond (really Squam Lake in Holderness, New Hampshire), elderly couple Ethel and Norman return to their summer cottage, where Ethel is immediately thrilled to hear the loons welcoming them back, although Norman claims he can hear nothing. They proceed to uncover the furniture and open the windows, while Normans failing memory reveals the onset of his senility.
Ethel is more energetic and lucid, joking that they are only in late middle age since she is still in her 60s and hes still in his 70s. Norman expresses a certain preoccupation with dying, having retired as a college professor many years earlier.
The couple take a canoe ride on the lake and are both quite excited to see loons on the water, when suddenly a speed boat disturbs their peace, prompting them to flash their middle fingers and yell at the boater. When they later gas up their motorboat, Norman confronts some teenagers who mildly ridicule him for being old. Thereafter, Ethel sends Norman out to pick strawberries nearby.
While Norman is on his walk he becomes disoriented and scared, wandering off the trail and into the woods. After a short run that causes him to pant heavily, he finds his way back to the cottage without giving Ethel any suspicions of the incident.
Norman settles down to read the baseball reports in a newspaper while Ethel reads aloud from a letter, in which their daughter Chelsea announces that she will soon be visiting with her new boyfriend, who is a dentist. They talk with the local postman who tells them that one of the oldest local residents, whom Norman suspects was a lesbian, has died at the age of 97, which he suggests is somehow unfair.
After the postman leaves, Norman confesses to Ethel that he got lost on his walk and needed to rush back to her. She embraces him and reassures him they will go on that same walk together to regain his memory. He wonders why she loves him so much.
Norman puts on a tie to prepare for the visit of his daughter on his 80th birthday, and Ethel cautions him to be nice to Chelsea and her boyfriend. Chelsea greets him by calling him Norman and he refers to her as fat. She then introduces a 13-year-old boy named Billy Ray, the son of her boyfriend Bill Ray, and asks her mother about Normans memory problems. Norman is brusque with Bill, who is clearly not comfortable in the rustic setting given his apprehensions about bears, and they make small talk about aging, with Bill noting that he is now 45. Bill is even more awkward in explaining that hes still recovering from his divorce, and how Chelsea has made his life better. Their friction increases as Bill tells Norman he intends to sleep in the same bed with Chelsea, which Norman sarcastically accepts. Bill tells Norman it will not be easy getting to know him, and he does not want to be taunted.
Billy, who is fond of saying the word bullshit, reluctantly agrees to spend time with Norman while Bill watches Chelsea and Ethel skinny-dipping in the pond after dark. Norman asks Billy what he does for fun, and the boy boasts that he sucks face with girls. In response, Norman tells him to go off and read the book 'Treasure Island'. Norman thereafter tells Ethel their daughter plans to sleep with Bill, and she recalls that they did the same thing once. Ethel tells Norman that Chelsea would like to leave Billy with them for a month while she and Bill go to Europe, and he agrees. Later that night they assemble around a large birthday cake and Norman says he has little to say about living for four score years.
The next day, after showing off her impressive body by swimming in a bikini, Chelsea is excited to see her old friend the postman, who still nurtures an understandable crush on her. Bill breaks the evident tension by falling into the lake.
That evening, everyone but Chelsea plays Parcheesi. She suggests that Norman has a drive to beat people.
The next day, Chelsea conveys her tormented feelings about her father to Ethel. Even though she is successful in Los Angeles, he makes her feel inadequate from a distance. Ethel wants her to quit being upset about her childhood, and tells her to move on with her life.
After Bill and Chelsea take off for Europe, Billy quickly expresses his contempt about his situation. He suggests hell head out west on his own, but Norman dismisses this foolish idea and tells him to go fishing with him and Ethel. The trio head out on the motorboat; Ethel reads under a parasol while the men fish. Billy later tries to impress them by diving off a dock into the lake, but his attempts are rather sloppy.
Some time later, Norman takes Billy out fishing again, explaining that a huge trout lives in the lake that he has been trying to catch for years, which he has nicknamed Walter. Ethel comes by later in a smaller boat and embarrasses them by bringing lunch. Norman catches and reels in a rather large trout, which Billy helps him bring into the boat, although he tells him that Walter is a much larger fish.
That night Norman starts a fire in the fireplace that gets out of control, causing Ethel and Billy to put it out. Norman gets upset at Billy, even though he knows the fire was his fault. Ethel asks Billy to have patience with Norman, who is just doing the best he can.
On another day, Ethel persuades Norman to let Billy take out the motorboat on his own, and she is then surprised when Norman gives her some immodest kisses. Having gained confidence in Billy, Norman later takes him to a special fishing area called Purgatory Cove, where the rocks eat boats. Billy carefully guides Norman through, even though heavy clouds have darkened the sky. While they are fishing, Norman ponders that he wont be around long enough to catch Walter, and Billy just then catches what he thinks is the treasured fish, only to find it is a dead loon. Billy asks Norman if he is afraid to die, and the old man is resentful to speak about it.
Norman then trusts Billy to drive the boat while he guides him out of the rocks. They are moving along well until Billy accidentally accelerates and slams the boat into a rock, launching Norman into the lake. Billy dives in and helps Norman to a rock; Norman, who is bleeding from the head and traumatized, still manages to hang on to Billy and help him cling to the rock.
After some hours, Ethel goes to the postman and convinces him to go out into the lake to find Norman and Billy. Spying them hanging onto the rock in Purgatory Cove, Ethel dives off the boat and into the water, swimming out to them. Norman swiftly tells her, You shouldn't be out this late at night.
A week goes by in which the men stay indoors, and at last Ethel relents to let them go fishing again. Chelsea then returns, surprised to find that Billy and Norman have gotten along so well. (She comments that Bill is back on the west coast for work.) Chelsea laments that Norman was never her friend like he is with Billy, then quickly announces that she married Bill while in Europe, only she is sure that Norman will not be happy for her, because he is a son of a bitch. Ethel slaps Chelsea across the face, sternly telling her, That old son of a bitch happens to be my husband, motivating Chelsea to run off and jump in the lake.
Meanwhile, out on the lake Billy hooks the mythical Walter, and Norman brings him up in a net. Back on shore, Chelsea apologizes to Ethel, and her mother tries to explain that Norman is just a frightened father, and implores her to be more kind. When Billy and Norman return, they are delighted to tell Chelsea how they caught and released Walter, and Billy runs to tell Ethel.
Chelsea tells Norman she wants to have more of a father-daughter relationship, that she does not want to be so mad at him, that she wants to be his friend. She agrees to come around more often, and quickly tells him she married Bill. She is shocked that Norman is indeed happy for her, and he suggests that he will enjoy seeing more of Billy.
Norman happens to mention that Billy had tried doing a backflip off the dock, and Chelsea proclaims that she could do so much better. Billy and Ethel nervously watch as Norman encourages Chelsea to go through with the dive, and even though she is scared, she clumsily goes heels over head into the water, with elation from all.
As Chelsea is packing up the car to leave, Norman gives Billy a cherished fishing rod, and gives her a swimming medal he won in college 60 years earlier. As they depart, she says to Norman, Goodbye... Dad, whereupon they embrace.
At the end of the summer, Norman and Ethel are packing up the cottage when he becomes faint after picking up a heavy box, and he collapses to the floor. She runs to get his nitroglycerin, forcing it into his mouth as she fears he will die. She gets the phone and frantically calls the operator for a doctor, but gives up with dread that it wont make a difference. He then surprises her by saying the pain has subsided. She confesses she thought he was really going to die, which gives her very dismayed feelings. He stands up with her help, feeling better.
He hears the loons on the lake, who have come to say goodbye. Just two loons, he notices, who may also have kids that have moved away.