$2M brought up a great point - $1250 isn't a small amount - however income and expenses are fairly relative to ones situation. For example medical costs seem minor now, but there are people with medicine costs that exceed my raise. For my situation it feels like a minor increase as it still does not meet the needs of myself and my family, but we're working on it.
Oddly, I have relatives who live off of social security, but they earn less than $500 per month. If it were not for family help (from guess who), I wonder what they would do?
I did read an article on just such a situation, quite a few americans have decided to move to less expensive countries, such as mexico and central america. while medical care is cheaper, there is certainly a gamble that the right level of skilled medical care would be available - especially when it comes to exensive daignostic capital equipment. Many procedures cannot be done easily in other countries due to the limited number of diagnostic machines available - one might have to wait (or incent) quite a bit to get it done.
On the other hand, when I was a student I was very poor - working and studying. I probably lived off of less than $1250 a month; I suspect about $400 in cash earnings and another $600 from savings.