A Self-Invested Personal Pension’s (SIPP) a terrific way to generate a long-term income in retirement. Building a pot of money for later life is more urgent than ever, as growing numbers struggle to get on the property ladder. Many could find themselves still paying off mortgage debt in retirement. Others will struggle to buy at all, and may have to rent their home in retirement. It’s a real threat.

More than a million mortgages now have terms extending beyond State Pension age. And the number of private renters over 65 has risen 24% in the last five years to 461,000. In February, the average rent was £1,430 a month, which adds up to £17,160 a year. So how much would a pensioner need in their SIPP to cover that?

How much do I need to cover my rent?

The answer depends on the yield it generates. Today, many investors like to put their money into a spread of FTSE 100 stocks paying dividend income, as well as offering share price growth potential. The average FTSE 100 yield’s currently 3.3% but it’s possible to generate as much as 5%, 6%, or 7%, by targeting stocks that pay above average dividends. Here’s how big a pot you’d need to fund the average rent, depending on the yield.

• 5% yield – £343,200.
• 6% yield – £286,000.
• 7% yield – £245,143.

Today, the most generous income stock on the entire blue-chip index is insurer and asset manager Legal & General Group (LSE: LGEN). It boasts an astonishing trailing yield of 8.67%. At that rate, somebody could cover their rent with a pot of £197,924. However, I’d never suggest anybody goes all in on just one stock. Dividends are never guaranteed, and diversification’s essential.

I’d suggest building a portfolio of around a dozen shares, to spread the risk. I think Legal & General’s worth considering as one of them. In fact, I hold it. I’m reinvesting every dividend I receive to buy more shares in the stock, and will draw them as income after I stop working.

But there’s an issue with this stock. While the dividend income’s brilliant, the Legal & General share price has performed poorly. It’s up 5% over the last year, but still trades at similar levels to a decade ago. Investors will be comfortably ahead on income, but frustrated by the lack of growth.

A spread of FTSE shares is vital

The underlying business has become a little too sprawling and messy, and profits have been bumpy at times. However, management’s been working hard to streamline the company’s structure and generate new sources of profits. And it’s keen to reward shareholders too. In March, Legal & General launched a record £1.2bn share buyback, while hiking the dividend by 2%.

Stock performance tends to be cyclical, and I’m hoping Legal & General shares will swing back into favour once current geopolitical uncertainty passes. I still think it’s well worth considering as part of a balanced portfolio for long-term investors focused on income, whether they’re homeowners, tenants or simply have regular bills to pay.