You don't need to resort to expensive insert systems for a basic operation like this. Grinding a cutting tool to cut a retaining ring groove is a fundamental lathe skill that you will want to practice. Based on the size of the retaining ring you are using, determine the groove width and depth. These standard dimensions can be found in
Machinery's Handbook (if you don't have a copy, get one; it is possibly the most useful reference manual you will get in a long time). For certain size shafts, you can also look up the dimensions
here.
Once you know the groove width, use a bench grinder to grind a piece of HSS tooling to the width of the groove. You basically want to grind the HSS to the shape of a parting (cut-off) tool, but shorter (there is a nice tutorial showing
how to grind a parting tool here). The length of the cutting portion of the tool does not need to be significantly longer than the maximum depth of the groove. Grind in a 7-10 degree rake to the top of the tool, and appropriate relief angles to the sides and face (so only the tip of the tool actually cuts and contacts the sides of the groove). Mount the tool bit in a holder, and you are good to go.
Unlike carbide inserts, HSS tool blanks go for about a dollar each if you are a careful shopper.
-dave
.