I imagine the tyrant retirement program would provide some sort of international security guarantees and permanent amnesty for the tyrant. That might require some U.N. forces to guard his mansion or island fortress or wherever he decides to retire. And he would have unrestricted travel rights, in case he wanted to get out of the country for his own safety.
Second, the tyrant would be written into the history books as some sort of founding father type. He would be, ironically, the father of democracy, having stepped aside to allow it to happen. The history books would be modified to show the tyrant did many good things in terms of national stability, and then stepped aside to allow democracy to flourish. His multiple genocides would be downplayed. No tyrant wants to get bad press after retiring.
The tyrant would also be allowed to keep much of the money he stole, say up to a limit of $5 billion per tyrant. That's enough to keep him in helicopters and hookers.
You could add some extras, such as putting the tyrant on stamps and currency, or agreeing to keep him on the ones already in circulation. The point is that retirement has to look like a safe and honorable thing.
The story line for the country would be that while a dictatorship made sense while the tyrant was in power, it only worked because of the force of his amazing personality. And since his country couldn't be expected to find another dictator of such compassion and skill, democracy is the best succession strategy. That spin might sound preposterous, but when you consider the things your own government tells you, it's not that different.
I know it will never work. But waiting for tyrants to die takes too long, and killing them is too expensive. There has to be a better way.