I would not call her child "a retard" to her face - nor even in print..

How kind of Bill.

"'retarded' is not prima facie insulting." It is where I live, and I strongly suspect it is where Bill lives too. Words can take on associations, and that can mean good manners requires that we recognise that. "Mongol" was at one time used without an intent to cause offence, but it couldn't be now.

"Retarded" isn't equivalent to "old" in the insult stakes. It's closer to "nigger".