Asylum once accommodated retiring individual after initial confusion (8)
I believe the answer is:
madhouse
'asylum once' is the definition.
(outdated term for an insane asylum)
I don't understand how the rest of the clue works.
(Other definitions for madhouse that I've seen before include "state of chaos" , "asylum" , "9d 21d [BEDLAM]" , "State of uproar and total confusion" , "badly run establishment?" .)