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Grave concerns

Have you factored funeral costs into your retirement budget?

Revenue for the funeral home and crematory industry is expected to top $16 billion in 2014, according to the National Funeral Directors Association.

The trade group makes estimates every few years of the median price of a funeral. In 2012, that number topped $7,000, up from $6,560 in 2009. Throw in a cemetery vault for burial and the number climbs by another $1,300 or so. Buy some flowers, fly in relatives for a memorial service, or host a post-funeral reception, and pretty soon we're into five figures.

And while consumers are gravitating to cremation — typically a lower-cost alternative to traditional burials — there are plenty of new opportunities for loved ones to part with cash when dealing with their dearly departed. From pricey urns to 24/7 grief hotlines, funeral providers are rolling out a slew of options.

"It's often the worst day of (survivors') lives, and they haven't done any shopping around," said Joshua Slocum, executive director of the Funeral Consumers Alliance. "It's the perfect consumer transaction for abuse to occur. Not all funeral homes are bad guys, but even absent any abuse, the consumer is automatically at a disadvantage because they are emotionally compromised and unaware about what is legal and what is not."

Funeral expectations should be factored into wider financial and estate planning, argues George Clarke, a former funeral director and author of "Nobody Wants to Talk About It: An Enlightening Guide to Planning a Funeral or Other Tribute."

"Aside from the theological aspect, funerals are about helping survivors begin the grieving process, so it should be a family discussion about the proper shape and form a funeral should take," he said. "It can start out very casually with simple words like, 'It occurred to me we never talked about this.'"‰"

Once you've got your loved ones' attention, experts said, consider these tips for avoiding added stress.

TACKLE THE BIGGIES: Cremation followed by scattering ashes or keeping them in an urn in lieu of a pricey casket, burial and headstone can save thousands of dollars. That's partly why the U.S. cremation rate has grown from 26 percent in 2000 to about 44 percent today, the association says. But cremation can be a big step if you haven't discussed it in advance, so start talking.

SHOP AROUND WHILE YOU CAN: The funeral industry is still highly fragmented, but two of the biggest chains — Service Corporation International and Stewart Enterprises Inc. — merged last year and now account for about 15 percent of the market. Consumer advocates protested the merger, and the Federal Trade Commission required SCI, also known as Dignity Memorial Network, to divest properties in certain markets because of anti-competitive concerns.

The FTC enforces some consumer protections, including the right to buy goods and services separately, so you can buy a cheaper casket from a discounter, for example, and use it at a local funeral home. Check out an explainer on the FTC's website at www.tinyurl.com/ftc-funeral. Consumers are also entitled to an itemized price list, though Slocum says base costs are often inflated and vague.

PLAN, DON'T PAY: Unless you are spending down assets in anticipation of transitioning to Medicaid, it probably doesn't make much sense to prepay for a funeral, Slocum said. While some funeral homes offer the ability to transfer a prepaid funeral to another location if the need arises, it can be a hassle, he said.

If you do decide to prepay, approach the contract with the same diligence as other big financial transactions, Clarke said.

"BUDGET" IS NOT A DIRTY WORD: Slocum says we make money mistakes around funerals because we don't have a lot of practice.

"Most people will arrange a funeral one time in their lives, maybe two. Compare that to buying cars or finding a good auto mechanic. We all joke about not falling for the car dealer undercoating, but we don't treat funerals that way," Slocum said.