You could just respond with a thank you, and a short note about how nice it is to be retired and fondly remembered by your former coworkers.
If you wanted to have some fun, you could always embellish it a bit..
" We appreciate the invitation to the potluck, but the spouse and I have been busy of late, polishing the teak on the new yacht before shutting down the lake house for the season.. We got a late start his year because our trip to Alaska in the new Class A diesel motorhome took up most of our summer. It is always a great trip, but this year we decided to cut it short and fly out of the Yukon so we could watch our grandson graduate at the top of his class at Oxford and make a quick climb of Mt Kilamajaro on the way home from our annual African safari..."
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"A yawn is more disconcerting than a contradiction"
Mason Cooley
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