Here's a peak at there picks -
Nicaragua - they're hot on Leon and San Juan del Sur. Of course Nicaragua is beautiful and it's also one of the Cheapest Places to Live. They also have a pretty good retiree & foreign residency program which I believe was modelled after Panama.
Ecuador - much like Nicaragua this small country has set it's sights on attracting retirees. With a love climate and a cost of living that US News calls, "the cheapest place in the world where you'd want to live" Ecuador is certainly a retirement place to consider.
Editors note: You may not find very many pleasant places to retire in the U.S. on a low budget but step outside American borders and the world is your oyster! Click on the image below to learn how you can retire on as little as $694 a month!
Panama - no longer considered 'the cheapest place to retire' Panama still continues to be rated as a very reasonable cost of living, especially for retirees on the famous 'Pensionado' Visa program. The one thing that puts Panama far and above our retirement hot spots is their infrastructure. It's the best you'll find in all of Central America and even revivals many large cities in the U.S. U.S. News points out that there are still many parts of Panama that offer bargains in real estate and cost of living. It's just the areas like Panama City, the Azuero Peninsula and Boquete which have developed world wide recognition and increase prices as a result. Not those those areas don't still offer some bargain too!
Source - The World’s Best Places to Retire For 2011