Graetz, of German descent, was born in Clarksburg, West Virginia, and educated in Columbus, Ohio. His father was an engineer with the Libbey-Owens-Ford Co. At Capital University in Bexley, Ohio, from which he graduated in 1950, he started a "campus race relations club"; Walter White, the leader of the NAACP, was one of the club's speakers. Graetz received a B.D. in 1955 from Evangelical Lutheran Theological Seminary in Columbus, Ohio. He married Jean Ellis (known as Jeannie) on June 10, 1951, in East Springfield, Pennsylvania. They had seven children together.