Tell her it's a shitty gift and that no one in their right mind would wear such a thing.
Ha! Just kidding. How about a Party City or something along that line? I'm thinking that if you can find a store that carries one of those dirty old man canes that have the rear view mirror at the bottom and a horn at the top (know what I'm talking about?), then that'd be the same place that would carry a shirt like that. Maybe even a costume store would have something like that.
Or a black t-shirt w/ iron-on letters. I mean, seriously, at this point, what are some iron on letters when this person is getting a t-shirt that says "Retired" on it? It's not like the iron on letters would make the shirt tacky.
Also go to a t-shirt shop, there you can chose the logo, the material, and it would be cheap since its only one. And they would have it done it no time. Also use the below options as ideas to tell the person at the t-shirt store.
i don't know if you have a store like this near you, but in my mall is this store that custom embroiders hats. it takes like an hour and you get it back. sometimes it takes a day or two depending on how buisy they are, but most of the time you can get it back the same day.