Retirement is when a robot that strongly resembles a human is killed. Because humans do not consider robots to be "alive" in the first place, killing a robotic servant of mankind is seen as "retiring" a machine and not murder.
The term originated in the openning scrawl of the science fiction film masterpiece, "Blade Runner", desribing what Blade Runners do to "Replicants" (robots so advanced they are indestinguishable from humans):
"Special police squads - BLADE RUNNER UNITS - had orders to shoot to kill, upon detection, any trespassing Replicant.
This was not called execution. It was called retirement."
Loosely, the is often used in scifi circles to refer to any instance when a (usually) humanoid robot that is designed to look human is terminated by a human, such as on the 2004 Battlestar Galactica with the new humanoid Cylons (the new Cylon models are very similar to Replicants, and Edward James Olmos appears in both Blade Runner and BSG).
"Have you ever retired a human by mistake, Mr. Deckard?"
"The report read "Routine retirement of a replicant." That didn't make me feel any better about shooting a woman in the back."
"Cally just retired Boomer!" (Cally has just shot and "killed" Boomer, who was revealed as a Cylon sleeper unit).
"Commander Adama retired Leoben by beating him with a flashlight"
"Starbuck's retirement of Simon was very graphic"
"Cally should get a medal for retiring that Cylon whore Boomer"