Ultimately, that’s up to you. Edifix will warn you if it detects that an article that you have included in a job has been retracted.
Of course, in some cases a retracted article may be cited with appropriate context that it has been retracted – in those circumstances, citing retracted work in full knowledge of its retraction is completely legitimate.
One major medical publisher that uses Edifix to restructure and validate their references has implemented a policy that citations of retracted works must make it clear at the point of citation in the body of the work that the reference has been retracted. This method is preferred over just indicating the reference itself is retracted in case a reader does not look at the reference list.
Another large publisher that passes the reference lists of submitted manuscripts through Edifix is instituting a system to return articles to authors at submission if references that have been retracted are detected, to ensure that authors are aware of these potentially problematic references and to give them an opportunity either to remove these references or to clarify why they are citing retracted material.