There is no definite amount that you should spend on rent. The less you spend, the more you have to save, but you have to consider all the costs, including the ability to walk/bike/take public transit, time lost commuting, and how happy you will be in your neighborhood.
At $32k a year you certainly could afford $650/month in rent. That would be about 25% of your income. Nation-wide Americans spend closer to 30% on housing costs, but as readers of this blog would agree, most Americans spend too much on most things.