Volcan, Chiriqui, Panama December 2007 - Updated April 2010
One of the first things that you will notice about the Republic of Panama is that the currency is the U.S. dollar. They are called "Balboas" here and the symbol is a 'B', but the paper money is pure United States money.. Coins are U.S. or Panamanian, with coin sizes and weights being identical.
There are a number of ways that one can get a resident visa to live full or part-time in Panama. The web has many articles on investment, and on depositing a large sum of money in the Bank of Panama as routes to a visa. However, for most retired / retiring folks, the easiest and quickest way to get a resident visa is as a "Pensionado" or pensioner. Individuals have to prove $1,000 per month income from a government or long established private pension fund. The requirement is $1,200 per month for a married couple I believe. You can also invest $100,000 in property and prove $700 per month income.
There are some other requirements including a local police report from your county or state of residence, and a passport. All documents in Panama use your passport number as your ID number. You can only file for the Pensionado while in Panama, but you will then need several documents certified in various ways while back in the U.S. (or your home country). Pensionados are expected to live in Panama for 4 months out of the year, but that can be spread throughout the year. You must have a (good) local attorney help you at every step of the way in the process if you plan to be successful. (April '08 -- there is talk that you will soon be able to file for a Pensionado Visa without using an attorney. Still not advisable.)
For Pensionados (local and approved foreigners) there are many substantial discounts that are mandated by law in Panama. The list is quite long and covered in detail on many web sites.
One of the big advantages for retirees is that the basic cost of living in Panama is lower than the United States or Europe. This is the case for the Volcan area where I live and much of the rural countryside. However if you want to live in a fancy apartment in Panama City or a nice house at the beach, you may spend as much or more than elsewhere.
Land and gasoline prices are about the same as the U.S., but food and basic services, including medical care are bargains by comparison. Public transportation is reliable and very inexpensive compared to the U.S. A forty mile bus ride is about $4 and a round-trip of 80 miles by taxi (in an emergency) is about $45 (less than the cost of going to the airport in most U.S. cities). Local taxi rides run from $1 to $3 maximum.
Medical care varies from good to excellent. We have a local clinic and 2 private hospitals only 40 miles away over good paved roads. We will soon have a local hospital in Volcan. Local shopping is good and "city" type is 1 hour away by road, or 2.5 hours if you want to fly to Panama City for fancy or large-mall shopping.
The local language is Spanish. Even though some locals speak English, you will need Spanish if you intend to live here and fit in. Don't worry, you will have time to learn after you move here. The local people are very friendly, tolerant and helpful.
Again there are many good web sites, although some have not-so-current information. I have not tried to be complete, just give you an idea of some of the advantages.