Thanks for your question! Using the word "retarded" in conversation with co-workers is not respectful and probably makes others feel awkward as well.
As a suggestion, you may want to bring it up with a disclaimer -- "so this is awkward for me but not as awkward as when you use the term 'retarded', which many people stopped using years ago to be more respectful of people with mental disabilities. So let's try to minimize awkward moments in the future?"
Most people can handle an awkward moment if you're authentic and you display a supportive attitude towards the other person.
Hope that helps!
Workplace Harassment Expert
May 7 2018