Takes in Charlie and small bird in retirement (7)
I believe the answer is:
assumes
'takes in' is the definition.
(assuming is a kind of taking in)
'charlie and small bird in retirement' is the wordplay.
'charlie' becomes 'ass' (both can mean a foolish person).
'and' says to put letters next to each other.
'small' becomes 's' (abbreviation - e.g. clothes size).
'bird' becomes 'emu' (emu is a type of bird).
'in retirement' says the letters should be written in reverse (retire can mean to go back or backwards).
's'+'emu'='semu'
'semu' backwards is 'umes'.
'ass'+'umes'='ASSUMES'
(Other definitions for assumes that I've seen before include "dons" , "Takes to be the case" , "Takes for granted or puts on" , "Take to be the case" , "Puts on; accepts" .)