with the average funeral costing $18,000, are you overwhelmed? from funeral home costs to burial services, here's what you need to know about saving money when planning a funeral, plus inheritance tax deductions.
table of contents
- how much does the average funeral cost?
- the 3 main costs of a funeral
- funeral home costs vary by size
- practical ways to reduce funeral costs
- frequently Asked Questions
what is the average cost of a funeral?
when faced with an unexpected family member's funeral, one of the most daunting questions is the cost. as of 2024, the average cost of a funeral in South Korea is about 18 million won. that's a lot of money to be caught unprepared.
but it's a different story if you're informed and prepared. understanding how funeral costs break down, utilizing funeral services, and taking advantage of inheritance tax deductions can significantly reduce the burden.
the three main costs of a funeral
funeral costs are broken down into three main categories. Let's take a look at the characteristics and average costs of each.
1. funeral service costs
this is the cost of having a professional help you through the entire process from when the death occurs to finalizing the funeral. in the monthly pre-paid funeral market, the average price is around $500.
funeral services start with the professional guidance of a funeral director, and can include greeters, transportation, funeral supplies, and more. what you get depends on the size of the organization and the tier of service you choose, so be sure to check carefully when you sign up.
2. funeral home costs
funeral home costs are more complicated than you might think. basically, you'll need to pay for the use of facilities such as the cemetery, morgue, and viewing room, but even within the same funeral home, the cost varies greatly depending on the size and location of the cemetery.
for example, at a large hospital funeral home in Seoul, the cost of a single day's use of the vault can range from a minimum of 450,000 won to a maximum of 355,000 won. since it is usually held for three days, the facility fee alone can cost at least 1 million won and up to 10 million won or more.
in addition to the facility cost, there are many other expenses. these include food for the mourners, flowers for the altar, and food for the ritual water. The largest of these is food for the mourners, which costs around 20,000 to 30,000 won per person.
funerals are categorized into family and general funerals based on the size of the mourners, with a threshold of 100 people. if you have a general funeral, you need to prepare more than 200,000 to 300,000 won for food and drinks alone.
3. burial costs
the way you choose to honor your loved one determines the cost of burial. cremation is the most common choice these days, but after cremation, you'll need to pay for an urn, a burial fee, and ongoing maintenance.
if you choose burial, then there are construction costs for building a mausoleum and installing stones. costs vary widely by region and cemetery type, so it's a good idea to do your research.
funeral home costs vary by size
when choosing a funeral home, you'll need to decide on the size. this is because the average cost of a funeral varies greatly depending on whether you're having a family or private burial.
if you choose a small family funeral, you can use a smaller pallbearer and have fewer mourners to reduce the cost of hospitality. on the other hand, if you're having a general burial because of the deceased's social circle, you'll need to prepare a generous budget.
when choosing a funeral home, it's also worth considering the difference between hospital funeral homes and specialty funeral homes. Hospital funeral homes have the advantage of being accessible and close to medical facilities, but they tend to be more expensive.
practical ways to reduce funeral costs
here are two key ways to smartly save money on funeral expenses.
take advantage of the inheritance tax deduction for funeral expenses
many people don't realize it, but the actual cost of a funeral can be deducted when calculating inheritance tax. you can deduct up to $10 million for the funeral service and up to $5 million for the burial plot from the value of your estate.
in total, you can deduct up to KRW 15 million from your inheritance tax bill, but make sure you keep receipts and supporting documents to prove your expenses. You can't claim the deduction without receipts, so keep track of all your expenses during the funeral.
reduce funeral costs with prearranged services
preplanning is a prepaid concept. the price you pay when you sign up is the price you'll get later, so it's not affected by inflation. The cost of funeral services tends to increase by 3 percent to 5 percent per year, so the sooner you sign up, the better.
a typical funeral service requires a monthly payment of about 30,000 won, but recently, there are funeral products that cost only 100 won per month. the Goi 100 won funeral is a typical example, where you pay 100 won per month and the rest is paid when the actual funeral occurs.
it's a good option for those who don't have the money right away or can't afford the monthly payment. it's a great way to start planning for a funeral because it's a minimal investment.
frequently asked questions
Q1. I can't afford to pay for a funeral all at once, what should I do?
A. A funeral subscription is the most realistic option. by paying a small amount each month, you can pre-fund your funeral expenses, and you'll get the service at the price you paid when you signed up, so you won't have to worry about inflation. Some plans are as low as $100 per month, so you can get started without breaking the bank.
Q2. How do I choose a funeral home?
A. First, figure out how many mourners you're expecting. if it's less than 100 people, a small family-sized vault will suffice, and if it's more than that, you'll need to consider a regular funeral home. Hospital funeral homes are expensive but accessible, while specialty funeral homes are relatively inexpensive. shop around and choose one that fits your budget.
Q3. What documentation do I need to get an inheritance tax deduction?
A. You'll need to keep receipts and tax invoices for all expenses related to the funeral, such as funeral home fees, food costs, and the purchase of a burial plot. card receipts are also acceptable, so pay for everything you can with a card and save the receipts. attach these documents to your inheritance tax return and you may be able to deduct up to $15,000.
Q4. Which is cheaper, cremation or burial?
A. Cremation is generally cheaper than burial. burial involves the purchase of a cemetery plot and the construction of a mausoleum, while cremation involves the use of a mausoleum facility. There are also a variety of options for cremation, including arboretums and natural cemeteries, so you can decide according to your budget.
Q5. What should I look for when signing up for a funeral service?
A. Check the service items and scope carefully. this may include whether or not a funeral director is included, the type of vehicle provided, the number of greeters, and the quality of the funeral supplies. Also, the refund rate and terms in case of cancellation are important, so read the terms carefully before signing up.
wrapping up
the average cost of a funeral is $18,000, which is a significant burden, but it's manageable if you know what you're doing. pre-arranging with a funeral service and taking advantage of inheritance tax deductions can significantly reduce the actual cost.
funerals are a final act of respect for the deceased and a time for surviving family members to gather their thoughts. don't let the financial burden of this precious time overwhelm you, so why not start planning today?
if you have any more questions about funeral arrangements or funeral services, please leave a comment. we'd love to hear your experiences and questions.