I am an employee of a major corporation. After making a mistake I was asked by my boss if I was "retarded"? I was then asked if I needed to "ride the short bus"? Being a member of a family that deals with mental illness on a daily basis, these questions were hurtful. I am not sure what to do now?

My one sister is mentally handicapped and I can't stand when someone just throws that word around like that.

On the other hand, I don't think there is much that you can do. Who could you complain to if this is your boss?

You need to meet with someone in HR and explain what happened. He needs to be held accountable for this insulting remark. Either that or you tell him yourself. He may respect you for it.

You do have choices, and they are going to depend partly on how much you are willing to risk. If you were in boot camp in the army, remarks like this are part of the routine. You are expected to take it to be tough, to take commands, to do what has to be done without question. The workplace has some of the same aspects. If he doesn't touch you or get personal (e.g. telling you that you ARE retarded because of this thing or that), then it's best to let it roll. If you want to confront him, do it in a disciplined way - tell him that you are working hard to not make mistakes and it helps if he doesn't demean you and your family. There is no need to go into details.
Going over his head when it isn't more than just an outburst like this one is bound to get you let go first when there is a layoff. Or worse. They don't have to keep you employed there. Employees are expected to deal with problems like adults, and that means dealing directly with whoever you are having a problem with.

What was the "mistake" you made? I'm not excusing your boss, but did he consider it a mistake you should never have made?