I like the idea of retirement, but the Guard get thrown at some terrible things, and I can imagine them not so easily getting retired. Some of them are "mercifully" liquidated just for seeing some types of enemies (or some types of allies), and with the potential likelihood of racking up Insanity and Corruption points, going howling mad, or becoming part something else, it might just be easier to put you down, after 20 years of fighting some of the most terrifying shite in the universe.
As for morale, I'd say that's a Commissar's job; maintaining morale, at the business-end of a bolter, if need be. Many Guardsmen are so indoctrinated if they are ordered to march into oncoming tanks, only hoping to be run down, and clog the treads with their gore, so that the slowed vehicles can be more easily picked off with anti-tank arms, they'll do it; so what's wiping some out who got old? Especially if you do it off in a quiet corner. Compared to the grimdark future, Logan's Run seems almost merciful.
All that crap said, I still prefer to imagine that the best of the survivors DO get to retire, in the same sense that the Tau do; they become instructors, passing down their field experience, or they maybe become some sort of Officer. I could even, just slightly, see some planets working into their military budgets paying to have some "heroes" returned home; someone has to train their troops, and the tithe frequently takes many of their best soldiers. Maybe they get seconded by the Schola Progenium, to train the best soldier the Imperium has, or get picked up by an Inquisitor with a mind for gun-barrel diplomacy. There's also always that last, unlikely hope, that perhaps their service will either attract the attention of a foraging Rogue Trader, or perhaps, like the smallest number, become Rogue Traders, and continue to serve the Emperor beyond the reach of His blessed light.