How much does it cost to die in America?

Well over half (58%) of all Americans said they couldn’t afford the costs of a funeral if they had to, according to a new survey from CardRates.com. That percentage is higher among Gen Z, with 71% unable to afford funeral costs, while 58% of millennials said the same.

Most concerning, more than half of GenX (51%) and Boomers (52%) said they would not be able to afford a funeral if a loved one died. For people over 50, who may be expecting to deal with a parent’s death within the next few decades, or even sooner, this becomes another financial burden that keeps us awake at night.

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The large gap between funeral costs and savings

Life insurance policies or an inheritance may cover the costs, but it can take time for those funds to become available. Obviously, time is of the essence when you’re facing a loved one’s funeral and burial, which means a need for liquid cash. 

The median savings account balance for Americans is $8,000, according to Federal Reserve data, while the median cost of a funeral with burial is $8,300. According to a separate survey from personal finance website Bankrate, 47% of Americans have less than $1,000 in emergency savings, leaving a tremendous divide between funeral costs and liquid assets.

Where you can save money when saying goodbye to a loved one

“When people think of a funeral, there are certain elements you have to pay for,” said Erica Sandberg, finance expert at CardRates. “There’s the casket, the embalming, the memorial service, the actual funeral plot, the gravestone. Those are your traditional costs.”

Fortunately, there’s some flexibility in how much you’ll pay for each aspect.

For instance, memorial service with food doesn’t have to be a fancy affair; it can be a potluck in your home or a dinner at a favorite restaurant where guests pay for themselves.

“There’s also an extreme difference between caskets,” Sandberg said. “You can spend very little for a basic box or the sky’s the limit. It depends on the wishes of the person who passed, if they even made their wishes known.”

If not, you have an opportunity to stick to a smaller budget and research affordable options. For instance, cremation costs substantially less than a burial. You can choose to hold a funeral and wake, or simply join loved ones together for a celebration of life at a later date.

Avoid making decisions under stress

When making decisions about death costs, Sandberg recommended having someone who isn’t as deeply affected by the death with you to make the funeral arrangements.  

“You’re going to be in a highly emotional state, which means you’re going to make some decisions when you’re least capable of making practical, rational decisions,” she said.

If you haven’t spoken with your loved ones in advance about their wishes and how you’ll pay for it, having someone with you can help you avoid making rash decisions you might regret.

“You have to honor your financial capabilities and that includes during this very difficult time,” Sandberg said. “Grief can twist your perceptions. You may feel guilty about looking cheap. But would your loved one really want you to struggle to pay for these expenses?”

How people plan to pay for a funeral

Roughly one-third (34%) of Americans said they’d pay for a funeral with a personal loan, while 26% said they’d put it on a credit card. Both of these options can offer funds within 48 hours or less, making them a good stop gap if you’re waiting for a life insurance payment.

“Loans are great [because] the interest rates are typically a lot less than a credit card,” Sandberg said.

Try to borrow as little as possible, either by splitting costs with family and friends, using your own savings, or selling assets, which 8% of survey respondents said they plan to do. 

“You have to honor your financial capabilities and that includes during this very difficult time. Grief can twist your perceptions. You may feel guilty about looking cheap. But would your loved one really want you to struggle to pay for these expenses?”

If you have to use a credit card, try to open a new card with a 0% APR for at least a year and have a plan in place to make regular payments to erase the debt before interest accrues. You’ll save on origination fees that often come with personal loans and may avoid interest charges.

If you have to put it on an existing card, Sandberg warned, try not to max it out. It’s smart to keep your balance below 30% of your available credit to protect your credit score.

But if you max out a card you’re accustomed to using for subscription charges or everyday expenses to earn rewards, it could create cash flow issues.

“Even if you usually pay it off every month, it’s going to put you in a tight financial position if you use that card on a regular basis,” she said.

Having the difficult conversations: From last wishes to splitting costs

Ideally, you can have a conversation in advance about your loved one’s last wishes. That’s a good time to discuss where the money will come from, as well.

Speaking from personal experience, Sandberg pointed out it’s important not to force the conversation. Her own mother didn’t want to talk about last wishes and left it to Sandberg to decide.

“I personally don’t believe you should push,” she said, noting that in many cases, it does come down to the family making the decisions and taking on that responsibility.

Of the various cohorts, GenX was most willing to share responsibility. Thirty-five percent of this demographic (compared to 31% of all ages) said they would borrow money from family or friends to cover funeral costs.

While she said GenX is on the right track asking help, she noted, “I’m not a big fan of [person-to-person] loans. Gifts are much better than loans between family and friends, since [loans] come with emotional connections. They can get very messy.”

In either case, it’s important to have a plan and put it in writing. Peer-to-peer payment services like Venmo can make it easy for loved ones to pay a lump sum upfront or even send cash monthly to contribute to personal loan or credit card payments.

“Have a conversation about who can help, and in what increments,” Sandberg said. “The point is, a funeral does cost money. You have to look at how much you’re willing to spend and who’s going to be willing and able to contribute.”  

This story was written for TheStreet by Nifty 50+

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