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Pre-paying funerals important as retirement saving

Pre-paying funerals important as retirement saving, say funeral directors

Most New Zealanders don’t pre-pay their funerals even though it’s just as important as saving for retirement, says the Funeral Directors Association.

Chief Executive Katrina Shanks says all the best advice is that saving for funerals is something everyone should consider but New Zealanders remain one of worst at doing this.

She was making the comments at the beginning of Money Week.

“Kiwis are notoriously bad at planning for their futures, especially with regard to financial planning. Until KiwiSaver came along, most people didn’t think about their retirement. Now that has changed and it’s time for us to think a little further out.

“Pre-paying your funeral is just as important as putting something away for your retirement, and there are huge benefits of doing this.

“I know of families who have had to scramble to find the money because there was none set aside, and this interrupted their grieving.

“A particular example was when a man’s body was left in a rest home for more than a day because his family couldn’t afford to get him cremated. The executor couldn’t afford the $1900 in fees, and signing over the body to the funeral director would have made her liable for all costs. If there was a pre-paid plan in place this would not have happened.

“Even though the executor was told there could be a WINZ grant available, and that by law councils can waive burial or cremation fees for poor families, she obviously wasn’t prepared to commit to being liable for the costs in the meantime.

“It was a distressing situation at a very stressful time, and one that could have been avoided.

“Thankfully, in this case the funeral director worked with the rest home and the District Health Board to finally get the situation resolved at no cost to the family.

“I also know of families who have been surprised to discover their loved one had a pre-paid funeral plan, and of the relief that brought. It was something they didn’t have to worry about.”

Mrs Shanks says it is estimated that less than 5 per cent of New Zealanders pre-pay or plan their funeral in any way.

“We're miles behind Australia, the UK, and America.

“A recent survey in America found that the 25 per cent of adults who choose to pre-arrange their funerals do so for two main reasons: so their survivors don’t have to pay for them or worry about them, and to guarantee the deceased’s final wishes are taken care of exactly how they want them.

“That’s the message New Zealanders need to get.

“Many do decide to look into it when they are going into retirement homes but often that’s too late to be able to build up a sufficient amount to take care of things in the way they would like. Or they end up rushing the decision in order to obtain the $10,000 residential care asset exemption for a pre-paid funeral.”

There are two key types of structures to consider for the pre-arrangement and pre-payment of funerals – trusts or insurance.

“The options need to be considered carefully, and the person most able to help work through advanced funeral planning is a local Funeral Directors Association funeral director. They can help you consider all aspects of pre-arrangement and will talk to you about the choices available.

"Advanced planning for your funeral is an extension of financial literacy and one we as a society must consider sooner rather than later."

© Scoop Media

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