Retirement or even moving to the Hall of Fame shouldn't be forced on the mods. They should be asked first whether they want to be only mods or mods + hall of fame. A good title would be mentors. Adding them to the Hall of Fame directly is like giving a lifetime achievement award to them. Meaning, they're past their due. And I'm sure, no mod would admit that!

And what if some long-inactive mod feels an itch to go back to the good ol' days... of locking a thread, of banning a member? Why should he/she be denied that?
The retirement idea is a bad choice. What if tomorrow someone suggests retirement for admin(s) too??!