well it is 1st of all kinder t call it flag 'retirement' rather tan 'flag burning' !!
in the flag code there is nothing to say for the method of retiring a flag on ly that it should be performed on flags that are no longer fit to fly or display.
i have seen and heard several methods of going about retiring a flag
generally it is accepted to burn stripes first and then the stars.
some people do this by cutting the canton (star section) from the rest of the flag and then perhaps cutting each stripe apart then burning each piece of fabric one at a time on a fire that has been lit especially for the purpose of retiring the flag. it is deemed disrespectful to retire the flag on fire that is there to burn other things aswell (apart from of course the firewood!)
other versions have included retiring the flag in a metal can- this is probably the best way to retire a nylon flag or flag made from cheap polyester as these give off alot of black smoke and can also have pieces come up out of the flames. best also to retire these by folding the flag 1st- in a square not a triangle. perhaps to still remve the canton from the stripes and retire it seperatly from the rest.
things that can also be done is to sa the pledge of alliegence sing patriotic songs kiss the canton area of the flag