What Paying for a Funeral Really Means
The vast majority of families in the United States cannot afford to pay for a funeral out of pocket. Although every funeral costs a different amount—and because you can cut back by choosing cremation or direct burial—the reality is that only 15 percent of Americans can easily cover the $6,000 or $7,000 out-of-pocket expenses that arise following a death.
A similarity would be buying a new car and paying for half of it upfront, or saving 5 percent for a down payment on a house—something that many families struggle to do for years. The amount of money a funeral costs is equivalent to an international vacation for a family of four, or half a year’s college tuition at a state university. In short, planning a funeral requires quite a bit of money.
How Families Pay for Funerals
Because this kind of money is difficult to come up with on short notice, many families struggle to cover funeral costs. In order to avoid going into debt, they may:
- Tap into a savings account
- Sell a car or other large-ticket item
- Cash in a life insurance policy or 401(k)
- Take out a second mortgage
Additional options include payment plans offered from funeral homes or unsecured bank loans—both of which are dependent on your credit rating and current financial situation.
Even these actions are restricted to a privileged few in a good enough financial situation to have flexibility. Not everyone has a retirement package they can use for these types of emergency situations, and a bank loan may be an impossibility during tough economic times.
That’s why advance funeral planning is such a hot-ticket item right now. Like buying a car over a long period of time and with regular, easy-to-manage payments, a pre-arranged funeral allows you to set a budget that works with your lifestyle. It does not matter if you are purchasing for yourself or planning ahead for a loved one—there are many kinds of flexible options that range from funeral insurance to an all-expenses-included funeral from start to finish.
How to Manage Funeral Costs
Although you might feel that paying for a funeral now is an impossibility, it is important to consider the alternative. A hundred dollars a month right now is much easier to manage than a hefty $7,000 chunk at a time when you may be facing the loss of the deceased’s income or regular financial contributions.
Life is always a delicate balance, and the loss of a loved one can happen at any time. Although no one wants to spend a large portion of their income on something so unpleasant, the reality is that you will eventually pay for a funeral whether you want to or not. By planning ahead and making advance funeral arrangements, you can avoid some of the trickier financial pitfalls and rest assured that your loved ones will be taken care of after you are gone.