The ultimate way to one-up inflation: Prepaying for your own funeral

Is preplanning and prepaying a good idea?

Generally speaking, a basic funeral fee includes planning, securing permits and copies of death certificates, preparing notices, sheltering the body and coordinating arrangements with a cemetery or crematory, according to the Federal Trade Commission.

An average casket costs over $2,000, and some of the nicest ones sell for as much as $10,000.

Planning for and prepaying your funeral — as strange as it may seem — can allow you to lock in a price for something that there’s no doubt you’ll need eventually. Those funeral fees, caskets, urns and related expenses could be a lot more expensive down the road.

The median cost of a funeral with a burial was $7,848 in 2021, up 6.6% from five years earlier, according to a study from the National Funeral Directors Association. The cost of a funeral with a cremation increased 11.3% in that same time period to $6,971.

It’s not easy to come up with that kind of money suddenly — especially these days when so many people are struggling with high prices and trying to pay down debt.

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The downsides of preplanning

It doesn’t always make sense to pay ahead, according to the nonprofit Funeral Consumers Alliance.

Your survivors may not understand a contract you've made with a funeral provider — or even be aware of them. They may also be stuck paying additional fees. And many states, the group cautions, don’t offer consumer protections for prepaid funeral money.

If you do decide to prepay, the Alliance recommends making sure your plan allows for a full refund or one with little or no penalty if you need to cancel.

And if you’ve purchased funeral insurance, the money should be transferable to another funeral establishment should you move, change your mind or the company closes. If you do transfer your funds, however, the new funeral home is not obligated to honor the prices you were originally quoted.

Why many people choose to preplan

In a recent survey of Americans age 40 and older, just 17.3% of respondents reported making prearrangements for their funeral in writing, either to family or a funeral director. And of those people, 43.3% have prepaid for funeral expenses.

Those who prepaid said they did so to guarantee prices and so their survivors wouldn’t have to pay for the arrangements or worry about making them. Those who had preplanned but not prepaid said they were likely to do so within the next five years, according to the 2021 study from the National Funeral Directors Association.

The pandemic is also playing into the way Americans feel about funerals. Over a third of respondents said they are more likely to preplan their own funeral/memorial arrangements since the onset of COVID.

Nontraditional funerals are also gaining momentum. Just over half of the respondents said they would be interested in exploring “green” funerals or natural burial options because of potential environmental benefits, cost savings or for another reason.

Eco-friendly funerals and burials incorporate things like biodegradable caskets and fewer chemicals used in preparing a body for burial.

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What else can you do to prepare yourself and your loved ones?

Preplanning your funeral is sort of like buying life insurance. Nobody wants to do it, but it pays off handsomely for your loved ones.

A sufficient policy will not only ensure your funeral is paid for but will also take care of any family members who are counting on your support.

Death is no fun to think about, but it's easier to get excited about your retirement. You want to make sure you have ample funds to ensure you can enjoy your golden years and you'll never be a financial burden on your family. If you need help establishing a plan, it can help to call in a certified expert.

And of course, you’ll want to enjoy that retirement as long as you can. So taking care of yourself now is key. If you need health insurance, shop around to get the best rate. The Insurance Information Institute recommends comparing three or more quotes before settling on a policy.