In case you haven’t heard, or cared to know, Britney Spears makes about $737,000 per month, according to the Associated Press. That’s right: per month.

Any guesses as to how much of that she is putting away for retirement? Court documents reveal that she’s not saving or investing a penny. More than $100,000 per month goes toward gifts, entertainment and vacations alone.

While the dollar amount is unusual, Ms. Spears’s spending is actually pretty normal.

On the whole, most Americans save almost nothing. In 1982, people saved on average 11 percent of their disposable income; by 2005, however, the personal savings rate was barely above zero. According to the U.S. Department of Commerce, in 2006 it fell to negative 1 percent, meaning that people spent more than they earned—borrowing or selling assets to make up the difference.

This and other trends, such as billowing credit card debt and rising default rates, suggest that few people are saving enough for the future. According to Vanguard, two thirds of all 25-year-olds who have access to a 401(k) plan are not contributing. According to another study, the average 50-year-old now has less than $50,000 in liquid assets for retirement.

One uncomfortable fact that investment companies like Vanguard would downplay, however, is that even for those few who have the foresight to put money away for retirement, the slumping U.S. economy is stacked against them.

Inflation eats savings. The Labor Department said last Thursday that its consumer price index rose again in October. Prices were 3.5 percent higher than a year earlier. That means the $100 you stashed away in your cookie jar last October is only worth $96.50 today.

Over time, the compounded effects of inflation can completely destroy savings. Granted, if your money was earning 5 percent in a bank account, you may have netted 1.5 percent in interest. But even that 1.5 percent profit requires one huge assumption: that the government-calculated rate of inflation is correct.

In the mid 1990s, the government drastically changed the way it calculated inflation, which had the misleading result of indicating a much-reduced inflation rate. Under the new calculation, if you bought a base model $2,000 computer three years ago and then replaced it with another base model $2,100 computer today that operates twice as fast, the computer can be counted as only $1,050 in the consumer price index. How is this possible? The government argues that because your new computer is twice as fast, you are getting twice as much bang for your buck—thus your new computer actually fell in value—and thus inflation as calculated by the government is reduced. The fact that you still spent $2,100 rather than $1,050 somehow doesn’t matter.

Does that make sense? Try going down to the local computer store and telling the sales staff that you’re only willing to pay $1,050 for their $2,100 computer because the government’s consumer price index says that’s all it is worth. I’m guessing they won’t follow the logic.

According to the Daily Reckoning, if inflation was calculated the same way it used to be, today’s actual inflation rate would be almost 10 percent.

If you believe that figure rather than the government’s calculations, then the money you left in the bank last year at 5 percent interest actually lost at least 5 percent of its value! Compound that rate of inflation over the past few years, and the numbers get really ugly really fast.

The American Farm Bureau Federation confirms that government inflation numbers may be much too low. So it is not much of a surprise that Thanksgiving dinner will cost a whole lot more this year. The traditional meal, including turkey, stuffing, sweet potatoes, rolls with butter, peas, cranberries, a relish tray of carrots and celery, pumpkin pie with whipped cream and coffee with milk, will cost an average 11 percent more this Thursday than it did last year.

Breakfast certainly costs a whole lot more lately too. In July, egg prices were up 33.7 percent from last year. A glass of milk with those eggs costs 21.1 percent more than a year ago. Add a slice of toast and the typical American paid 8.8 percent more than he would have in July 2006. A navel orange to round out the meal would cost 13.6 percent more.

Energy costs have also surged. The Labor Department report for October indicated that energy costs rose 14.5 percent from October last. Just about everything seems to be getting more expensive with the notable exception of housing prices, which on average hit record levels in 2006 and are now falling.

So just about everything people need to survive is up double digits from last year—yet the government says inflation is a “tame” 3.5 percent. Who are you going to believe: the consumer price index, or your shriveling pocketbook?

Inflation has become such a problem (and the U.S. dollar’s purchasing power has been dropping so rapidly) that foreigners don’t want to hold dollars so much anymore. For example, starting this week, if you want to visit the Taj Mahal in India you will no longer be able to pay in dollars. The Indian government says it is losing too much money accepting the depreciating greenback. And in Canada, people for the first time in decades are no longer accepting U.S. tourist dollars at face value.

This is the reality in a sinking economy. Reality eventually catches up with the profligate spender—and even those who save take a nasty hit.

For 25 years, Americans have been on a collective shopping spree. Consequently, the consumer debt burden as a percentage of disposable income is near an all-time high. But America’s savings—a legacy of past generations’ thrift—are largely spent. Today, outside of home equity, most Americans have little money.

The next several years will probably be very different for consumers. “The consumer is retrenching, big-time,” says Richard Hastings, economic adviser to the Federation of Credit & Financial Professionals. “It’s starting to get to the point where people are achieving levels of debt that are getting uncomfortable.”

Consumers are clearly straining. Food prices: up. Oil and gasoline: up. Heating costs: up. Most other commodities: up. Credit card balances: up. Credit card delinquencies: up. Home foreclosures: up.

Meanwhile, home sales, prices and equity withdrawals: down. Bank lending: down.

Wages: flat.

Is consumer spending, which represents 70 percent of the economy, about to slow dramatically? You be the judge. Analysts have long predicted a slowdown in consumer spending. Nevertheless, the danger signs become more apparent all the time. When rising prices mean consumers have to cut back, the economy is bound to suffer. People like Britney might wish they’d have put something away in savings—even if its value isn’t what it used to be—a lot sooner.