As I’ve mentioned in a couple of other threads I have some background in the funeral business and will probable eventually study to become a funeral director as a post retirement from cows occupation.
The typical standard is one’s “Sunday best”, though MaterDominici’s suggestion of what one would wear to a wedding (or a funeral, for that matter) is appropriate. I hadn’t thought of someone having a “zipperred garment bag in their closet with EVERYTHING necessary to be buried in”, but planning ahead is always good and many elderly in their final years may not get out much and might not have something “fancy” in their current wardrobe. A thought is that nice things can often be found at a thrift shop inexpensively. While not that common in the smaller rural funeral homes I’m more familiar with, larger firms often have burial clothes for both men and women in their selection room.
I really don’t think how one is dressed for their burial has much to do with their judgment but our bodies are temples of the Holy Ghost (1 Corinthians 6:19) and are to be treated with respect and dignity, even after death. A friend of mine at the local funeral home said that even if a family asks for direct cremation with no services they still bath and lay out the remains, set the features, comb the hair, etc., and they will ask the family to bring clothing to dress the body in. A while back I read an article about the military mortuary at Dover Air Force base in Delaware, where fallen soldiers are taken to be returned to their families. It said that even when the remains are so badly damaged as to be unpresentable, or even undressable, after the body is bathed, embalmed, and placed in the casket, a full dress uniform is laid out on top of it.
Another thought for planning, it is traditional for the deceased to be laid out with a rosary in their hands, typically the one they used in life. Sometimes though this rosary may be a family heirloom or a very nice one that would appropriately be passed on to someone. Funeral homes that handle very many Catholic services will have rosaries available for this.