Business/Finance Funeral Industry News

So Who’s Paying for the Funeral?

April 5, 2013

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So Who’s Paying for the Funeral?

Guest article by: Jeff Harbeson, Executive Vice President & Chief Operating Officer of Funeral Finance, LLC.

For the last several years, the funeral industry has been abuzz about the impending Baby Boomer death market explosion. We have heard all sorts of things about how different this group will be from their “Greatest Generation” parents. The Boomers are all about themselves; they want customized services to reflect their personal story; they will pay for something different, they don’t want their “parent’s funeral”, and so on.  We’ve also been inundated with statistics regarding how this generation is going to be the largest market to the death industry, to get prepared, and the need to reach out via internet and social media, etc.

With all the Boomer mania, there is an important issue that we are not talking about as an industry: Who is going to pay for the Boomers funeral? The Greatest Generation is, and was, diligent by either pre-planning with funded policies, life insurance, or having savings set aside for final expenses…this was the Baby Boomers’ parents. All the Boomers have had to basically do is show up to their parent’s funeral.

So when the onslaught of Boomer deaths start trickling in…what will that look like? They don’t want to go out like their parents, so as we are already experiencing, cremation is part of that change. The Boomers are not their parents either…they have over-spent, financially extended out and the 401k’s did not produce enough for the comfortable lifestyle that they were accustomed to back in the working days. And oops! They are also living longer thanks to modern medicine (how many would be dead now without Lipitor, by-pass surgery, etc.)? The financial health miscalculations of the Boomer market may present an unexpected problem for our industry…who is going to pay for the Boomer’s funeral?  If they are outliving their money, have little to no life insurance, did not pre-plan or are spending more than expected for medicine…can we count on the Boomers’ kids, also known as Millennials, to take care of the final expenses?

Let’s take a look at the millennial generation, those between 18-35 years of age.  The Millennials hold an average debt of $45,000; everything from student loans, credit cards and cars. This group has a higher unemployment rate above 12%, and 28% live at home with their parents.1   Another interesting statistic is that only 14% of the above described age group attend any type of religious service regularly.2   The Millennials are also the same generation that was always awarded a medal or trophy for placing several positions down from first place…everyone is a winner, even if they did not give it the best effort.  So what does this mean?

If Baby Boomer mom or dad dies with little or no life insurance, no pre-need funded contract and is out of their own money…is the Millennial offspring in good enough financial posture to pay for burial expenses?  With funeral home expenses, including services, casket, vault combined with cemetery expenses other cash advances totaling over $9,000, how may Millennials are going to fork out that much in cash or credit card?  So needless to say, if cremation is steadily rising now… just wait.

The Millennials are notorious for their communication via email, text, Facebook, Twitter and the like. (I have actually watched one of my sons “talk” to his girlfriend in the same room via text.) So, with little access to cash, maxed out on credit, now they have to deal with grief?  Remember, the overwhelming majority don’t attend church. “Mr. or Ms. Funeral Director, I can’t afford to pay for a burial and I don’t want to deal with a service of any kind, I’ll just post that I lost my parent on Facebook so my “friends” can comfort me. Can’t you just do something so I don’t have to deal with this?” I have already personally seen this several times at funeral homes and you can place a relatively safe bet that if you haven’t yet, you will in the near future.

So is the Baby Boomer “Boom” really going to put the funeral industry on solid financial footing for the future? Perhaps, but with the current declining economy, the financial health of not only the Boomers, but their children, we may have even more turbulent times ahead. It’s time for funeral home owners to take a hard look at their operating overheads, pricing strategies, arrangement training, current market penetration and accounts receivable processes. Formulate strategies that will produce sustainable fruit for the future.