Geezer has it right

valor/morale is tracked by the individual fighting man, but armor/weapon upgrades are tracked by the unit. When an upgraded (but depleted) unit is retrained in a province with only the basic build structures, the unit retains its armor/weapon upgrades, but any valor or morale upgrades from combat or the original build province are not given to the "raw" recruits that replace the veteran casualties.
So does BAD

it's the percenatge cost of what's missing from the unit. And retraining for weapon and armour is free.
I use retraining to a limited extent, usually opportunistically, but I rarely retrain a unit when I can build a new one. Royal Family guys get retrained, as do General nits with god qualities once they are decimated. And if I have units sitting in a province that isn't training new units and it would give them an upgrade, hey, why not.

I'd rather train new units and combine veteran units - retraining mixes vets and FNGs together into one unit, while combining can make units of all vets (if you combine two veteran units, of course).

Plus, IMO combining is easier to manage than sending units back to a specific province.

Check out this thread Combining Units

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