Simple question/experiment: is the back pain more evident when he's being worked regularly or when he's had time off? If his pain is worse when he's in use, retire him. If it's worse when he isn't in use, talk to vets about best way to keep him in shape and reduce the pain. This may be riding or with in hand work like lunging/long lining. I say this because my horse with back pain is almost reaction free to palpation if she's worked every day, but when she gets a few weeks off I can't even curry her back. Also, my personal experience is that my back issues decrease with varied exercise (flag football is way better than than just going for a run or sitting at home with a book).