Is this sentence correct? "Raheem was leading a happy life after his retirement." I used past continuous tense here.Can I use past simple tense in this same sentence without changing its meaning? Like this example - "Raheem led a happy life after his retirement."
It depends on your intended meaning. Changing the tense does change implication depending on context.
Past continuous implies that he had a life that was happy after his retirement and now he has a life that is not happy. It implies an ongoing activity, like life. He was leading something (a happy life) and now he's leading something else (maybe an unhappy life).
Simple past implies an action was completed, like life. It makes it sound like he's dead now. He led a life and now he doesn't lead anything, including a life. However, if you followed it with "Now he's a successful medical student," or something similar, people could enjoy the suspense if it were a story... you led them to believe he was dead now, for just a moment, before informing them of the truth.