Now 40, Neuer was outstanding for Bayern in their Champions League quarterfinal first-leg win at Real Madrid in midweek.
Off contract in June, Neuer and Bayern management are discussing whether to continue together next season.
For Kahn, Neuer should call it a day in June, explaining on Sky Deutschland: "Isn't this the perfect time to win every title with Bayern one last time and retire at the highest possible point?
"Do I really need another World Cup in the USA with temperatures over 40 degrees Celsius in the shade? Do I have to put myself through that? I think those are the thoughts he's having right now."
Moreover, the former Bayern keeper advises Neuer to 'hang up his gloves' in June: "If he wins the Champions League again with Bayern, it would be his third title. He's already a world champion. Then it would be wise to say: 'That's it.' That's quite an art for an athlete."