I disagree with the 1/3 cap hit for retiring players. If the goal is to make contracts more important why punish teams when players can be so volatile and retire at any time. If you insist on making a change I'd recommend making it so a player needs to buy themselves out of a contract before they can retire and recreate(or wait until a contract is finished). This is common in real life as players in the KHL often need to buy themselves out of their contracts to join the NHL (Komarov as an example). This will deter people from retiring and screwing over teams, while at the same time enforcing contracts on both the players and the teams.

At the end of the day, this is a game, everyone is here because they want to be here. If you restrict people's freedoms to enforce a rule that doesn't give any real competitive advantage, some may decide it's just not worth it and lose interest. I understand the goal to make this as "realistic" as possible, but rules should be focused on making this fair and fun for everyone. This rule in particular seems to be focusing more on realism than fairness and fun.