Many people could have as much as £9,853 in additional annual income in retirement if they cut back on ‘little luxuries’, Scottish Widows has claimed.

The insurer says that, on average, people spend £124 per month on everyday luxuries, including ordering takeaway meals, taking taxis rather than public transport and buying clothes that are hardly worn. At the same time, 32% of people said they simply cannot afford to save any more than they already do.

Most people underestimate how much they spend on life’s little luxuries by £74 a month, Scottish Widows said. 12% people admit to not tracking their incidental spending at all and having no idea how much they could be splashing out on non-essentials.

62% say they plan to set a financial goal in 2018, whether spending less (28%) or saving more (45%). 33% of people spend less in January, cutting back by an average of £109.03 during the month and while 30% use this money to pay off debts, only 25% save some of it.

Robert Cochran, retirement spokesman at Scottish Widows, said: “January is traditionally a time when we set out to improve our financial habits for the year ahead and while it would be unrealistic to suggest we live entirely without little luxuries, there is an important message about the need to ensure untracked spending today doesn’t harm our financial security tomorrow.

“Our Retirement Report shows almost 23 million people are failing to save adequately for retirement, and so there is no time like the present to make the first step towards positive change. It can also help build a longer term saving habit and make a real difference to quality of life in retirement.”