You left out vital information for planting advice:

Where in the world is this located? Texas? New Hampshire? Mississippi? London?

What’s your planting zone?

What’s the sun exposure? How many hours of direct sun (if any) does the side of your house get per day?

We had a crumbling railroad tie retaining wall in front of our house. Because there was an existing tan slump block wall and planter elsewhere we used that material to replace the ties and it looks like its always been there.

You could put in a red brick retaining wall like your house but trying to match your foundation might be better. It’s probably cost prohibitive to get a gray stone wall although it would look great but what about a gray stone faced block wall?

If you give your general location I’m sure you will receive some groundcover suggestions.

We are in Pennsylvania. This is north facing

Pennsylvania is a pretty broad area. Are you near Philadelphia, further north toward Scranton, northwest, Pittsburgh? That would help us.

Do you need access to your back yard from that side? If so, you probably want a paver path flanked by low-growing perennials on the right. You'll need to fix the retaining wall first. If you don't I might go all in on shrubs.

If it doesn't get too dry, you could do ferns. I like Itea Virginica, Mt. Laurel, and rhodos for shrubs. The first two should be native to you, the rhodos could be, depending on the cultivar.

If you want to get rid of the grass now, but kick the can down the road on the retaining wall, I might put in hostas on the right side of the path/garden. They are cheap, hardy and repress weeds.

We are in Bethlehem PA- north of Philadelphia. This area mostly get shade all day.

We do not need any access to the backyard.

How high is the retaining wall at its highest? I looks to me like you may be able to do away with it entirely, and plant some sort of groundcover to hold the soil in place.

However, ground covers have to be weeded. Unless they are in very shady places, the maintenance is more than grass because grass has a machine that takes care of it. That you can grow grass there means it isn't all that shady.

I would replace the wall and make it a bit taller to prevent soil washing down. Then scalp the grass and cover thickly with wet cardboard and 3-4” of mulch on top.

After your mulch settles down in a couple of weeks, cut holes in the wet cardboard and put hostas there, big and enthusiastic growing varieties like Sum and Substance, halcyon, Empress Wu, etc. They will grow 4-5’ wide and completely cover the area. You probably wouldn’t need more than 6 plants or so. Once established, they are no-care and won’t let anything else grow there.

See Empress Wu below.