how to handle a psychologically ill or a mentally retarded child?

Usually, people seek the help of special education specialist. There are also psychologists who could determine the child's behaviour. I have to say that it is challenging handling mentally challenge kids, but, if you are a parent, I believe you will never get tired of taking care of the child and addressing his or her needs.

In most communities there are groups to help support parents and guardians of special-needs children. Usually the local public schools can direct a parent as to how to access these groups. In Ontario these kinds of things are covered by OHIP. In my community there is a St. Leonard's Society and there are Aboriginal Support groups and foundations, as well as an umbrella organization (I won't tell you the name) which can sort of direct parents to the various groups and organizations to help provide support, strategies, and resources to people who need help. Some people have even asked at Children's Aid Society (CPS in the states) for contacts to community supports. Do a search with the name of the community you live in and the condition you child struggles with or keywords like mental illness or something like that and just see what comes up. Failing that, ask your health care professional (doctor) or your local Health Unit for your city.