The traditional disposal method for an American flag is a ceremonial destruction by fire. Veterans' organizations have specific rituals for this process. They occasionally collect worn flags and hold public events to destroy them.
The American Legion adopted a lengthy official unserviceable flag ceremony in 1937. Held outdoors, it involves very particular placement of Legion officers and a series of formal pronouncements. Each flag is inspected by the Post Commander and then presented to be destroyed. The Chaplain reads a prayer and the Color Guard takes up a position next to the pyre. As the flags burn, a bugler plays the song "To the Colors." The flame is maintained until the materials are completely consumed. No scrap of fabric should be left.
The Veterans of Foreign Wars offers a simpler plan that can be carried out at home. The flag should be properly folded and then placed on a sufficiently large fire to fully consume the faded banner. Recommendations to commemorate the event include reciting the Pledge of Allegiance, saluting or maintaining a brief moment of silence.
Flags should be retired when they are torn, frayed, faded, defaced or otherwise marred. The flag is considered a symbol of the United States. Treatment and etiquette of the flag is governed by the U.S. Flag Code.