Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Funeral Industry
Transcript
- Lucas: The funeral industry might not be the first thing that comes to mind when you think about falling birth rates, but it's actually one of the clearest examples of how demographics reshape an entire sector. Luna: That's interesting — because on the surface, fewer births means fewer people overall, so you'd think demand for funeral services might shrink eventually. But the story is more nuanced. Lucas: Exactly. The key demographic driver right now isn't the number of deaths — it's the age structure. The baby boom generation is entering its final decades. In the US, deaths are projected to rise from about 3.3 million in 2024 to over 4 million per year by 2050. So volume is actually increasing. Luna: But the birth rate angle comes in through the family structure. Fewer children means fewer people to plan and pay for a parent's funeral. That changes everything. Lucas: Right. A 2025 report from the National Funeral Directors Association — that's the NFDA — found that 64 percent of funeral homes now offer pre-need funeral contracts, up from 48 percent in 2019. Pre-need means the person arranges and often pays for their own funeral in advance. It used to be a niche product, and now it's becoming the default. Luna: And that shift is directly linked to the fact that more elderly people don't have adult children nearby, or sometimes any children at all, to handle the arrangements. So they plan it themselves. Lucas: Exactly. The US cremation rate hit 61 percent in 2025, according to that same NFDA report. Cremation is generally simpler and cheaper than a traditional burial. But it's also more convenient for families who live far apart. You don't have to coordinate a burial plot, a casket, a graveside service — you can scatter ashes later, at everyone's convenience. Luna: So the industry is moving from a model based on big, high-margin funeral packages with embalming and a metal casket, toward lower-margin but higher-volume cremation services. That puts pressure on funeral home revenues. Lucas: And that's where the birth rate connection gets really concrete. Funeral homes are typically small, family-owned businesses. The average funeral home in the US handles about 110 calls per year. With cremation margins thinner, they need more volume to stay profitable. But the pool of potential owners is also shrinking — fewer children to take over the family business. Luna: We're seeing consolidation. Large players like Service Corporation International — which owns the Dignity Memorial brand — and Carriage Services are buying up independent funeral homes at a steady clip. SCI alone operates nearly 2,000 funeral homes and 500 cemeteries in North America. Lucas: And that's happening globally too. In Japan, which has one of the lowest fertility rates in the world — about 1.3 births per woman — the funeral industry has been innovating for years. They have 'funeral cafes' where people can discuss end of life plans, and some cemeteries offer 'eternal digital altars' where relatives can visit a virtual gravesite. Luna: Japan also has a high cremation rate — over 99 percent — and they've pioneered automated cremation systems that can handle high volumes. That's a direct response to a shrinking workforce and fewer family members to manage the logistics. Lucas: Let's talk about the economics in more detail. The NFDA's 2024 median cost of a funeral with viewing and burial was just over $8,300. Cremation with a memorial service was about $6,500. Those numbers have been rising faster than inflation — roughly 4 to 5 percent annually. Luna: But when fewer children are sharing that cost, it becomes a bigger burden per person. So we're seeing a rise in direct cremation — no service, just the cremation itself — which averages around $2,500. That's a huge revenue drop for funeral homes. Lucas: One company that's capitalized on this trend is Titan Casket. They sell caskets directly to consumers online, often at half the price of a funeral home. Their founder told the Wall Street Journal last year that about 40 percent of their customers are buying for pre-need. That's a massive shift — people shopping for caskets like they shop for furniture. Luna: And there's a whole tech ecosystem growing up around this. Apps like Cake and Losing a Loved One provide tools for end of life planning. The idea is to make everything digital, shareable, and easy to update. That's tailored for a generation with fewer siblings to coordinate with. Lucas: You know, this is actually a good moment to pull back the curtain a little on how this podcast works. We do over 300 shows a month — each one researched and scripted — with no ads. A small group of listeners keeps it going through buy me a coffee dot com slash fexingo. It's not a big ask, but it's what makes this kind of deep dive possible. Luna: Yeah, and we really mean it when we say every contribution helps. It's why we can spend time on a topic like funeral industry demographics without worrying about ad revenue. So if you've been getting something out of these episodes, that's the place to chip in. Lucas: Anyway, back to the trends. Another angle is how cemeteries themselves are changing. With cremation rising, the demand for traditional burial plots is declining. But simultaneously, there's a growing interest in green burial — no embalming, biodegradable caskets, natural markers. That's a niche that's growing about 10 percent annually. Luna: And that's partly driven by younger generations who have different values than their parents. But it's also a practical response to high land costs in urban areas. Some cemeteries are converting unused sections into memorial gardens or columbariums for cremated remains. Lucas: Let's bring it back to the birth rate specifically. A 2023 study in the Journal of Death and Dying found that childless elderly individuals were 70 percent more likely to choose cremation over burial compared to those with children. They also were more likely to have a pre-need contract. That's a direct demographic effect. Luna: And as the share of childless older adults increases — which it will among baby boomers, who had lower fertility rates than their parents — these preferences become more pronounced. The industry has to adapt. Lucas: One adaptation we're seeing is 'at-need' digital tools. For example, some funeral homes now offer live-streaming services for relatives who can't travel. That's become standard since COVID, but it's especially relevant when family is spread out geographically — which is more common when you have fewer siblings. Luna: There's also a rise in memorial societies — nonprofit groups that help people pre-plan and get discounted rates. They've been around for decades, but membership has grown 15 percent since 2020. Again, a response to people wanting control and affordability when they don't have family to rely on. Lucas: And let's not forget the workforce side. Funeral directors are an aging profession. The average funeral director in the US is over 55, and about 30 percent plan to retire within the next five years. With fewer young people entering the field — partly because it's not a growth industry in popular perception — there's a looming labor shortage. Luna: Some mortuary schools are reporting declining enrollment. That's a problem because you need licensed professionals to handle embalming and paperwork. But with cremation rising, the skill set required is changing too. You need fewer embalmers and more customer service and logistics people. Lucas: So the industry is adapting on multiple fronts: shifting to cremation, embracing pre-need, consolidating ownership, using technology, and reconsidering the physical space of cemeteries. All of these are responses to a demographic reality — fewer children per family. Luna: It's a stark reminder that demographic trends don't just affect big macro things like GDP or pension systems. They trickle down into very personal industries — and the funeral industry is about as personal as it gets. Lucas: Exactly. And one last data point: a 2025 survey by the Funeral Consumers Alliance found that 44 percent of Americans over 50 have no end of life plan at all. That's down from 52 percent in 2020, so progress is being made. But as the population ages and family sizes shrink, that number needs to keep dropping. Luna: It's a tough conversation to have, but the economics are pushing people to have it earlier. And that might be the most tangible impact of falling birth rates on this industry — forcing a cultural shift toward proactive planning. Lucas: Right. So next time you hear about fertility rates, think not just about schools and housing, but about the last chapter too. The funeral industry is a quiet bellwether for demographic change.