The first and foremost reason that Panama is one of the best places to retire in the world is because of the Pensionado Visa. This is said to be one of the best retirement packages in the world. It offers discounts on everything from health care, airline tickets, electricity, taxes, hotels etc. Of course we all know that anything worth having is something we have to work for. To obtain this coveted holy grail of the retirement world is not without it's share of headaches.
From what I understand, the Panamanian government came up with this discount program for it's own retiree's and then extended it to foreigners. This programs entices foreigners to retire in Panama bringing money into their ecomony.
Anyone can apply for this visa if they have a pension or are receiving social security from outside of Panama.