A retirement letter should be written in a basic business letter format and should be addressed to the retiree's employer. Even if the employer is already anticipating the employee's retirement, a formal retirement letter can serve as an official document regarding the transition.
A retirement letter should start with the announcement of the intended retirement date. It should include an expression of thanks for the relationship with the company, as well as a promise to help with the transition, including training a replacement. If there are unusual circumstances surrounding the retirement, these should be covered in the letter as well. Once an employee decides to retire, he should work out the details with his company's human resources department.