While many retirees from Detroit and other domains where pensions have or will be reduced would be thrilled to have it last until death, those with defined contribution plans such as a 401(k) or IRA have assets that will outlive them. An IRA or 401(k) can be left to an heir or a charity. It can easily outlast the owner, especially is there is an early death. That is not true with a defined benefit pension. In this regard, a defined contribution plan is far superior to a defined benefit plan in providing for the loved ones after the worker is gone.

When an individual is in charge of his or her own retirement account, there is also a layer of impermeable protection against corporate mismanagement or public-sector corruption. If a business is mismanaged, the pension is lost or greatly reduced. The same can happen with public employee benefits. Detroit is the most recent example.

Another one recently transpired in Boston.

Less than a year after retiring as chief of the Massachusetts Bay Transportation Authority  pension fund in Massachusetts, Karl White attracted $25 million in investments for Fletcher Asset Management, the New York hedge fund that hired him. As noted in an article in The Boston Globe, "Today that money is gone." The "investments" have been described by a bankruptcy trustee as having "many of the characteristics of a Ponzi scheme."

Individuals do not have that concern with a self-directed retirement account hosting a variety of shares of well-managed, publicly traded companies that have robust dividend yields with a history of yearly increases over the past half century.

It is tragic that retired workers must suffer reduced pensions because of public- and private-sector mismanagement. Instead, those nearing retirement should buying companies likeCincinnati Financial and American States Water for the long term based on their performance.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Yates is a financial writer who has had thousands of articles appear in periodicals and Web sites such as TheStreet, Newsweek, The Washington Post and many others. Much of his career was spent working on Capitol Hill for Members of Congress in both the House and Senate, on both committee and personal staff.  He was also General Counsel for a publicly traded corporation.  He has degrees from Harvard University, Georgetown University Law Center and The Johns Hopkins University.

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