What is the proper way to respectfully retire an old flag?
You would have to follow proper military code. There is a correct way to burn the flag. I suggest that you contact the VFW and ask them.
bury it or burn it at least it used to be that way
Burn baby burn
Burn it. However, there is a proper procedure. Contact the VA for info. Also, I believe the Boy Scouts of America still accept flags ready for retirement; at least, they used to..
The proper legal disposal of an American flag is first, the blue star field must but cut off the flag. Then cut off the red and white stripes separately. Then burn the pieces.
Per the US Flag Code Title 4, chapter 1, sec. 8(k). The flag when it is in such condition that it is no longer a fitting emblem for display, should be destroyed in a dignified way preferably by burning.