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Goodes has not played since suffering a head knock during a pre-season match for the Hurricanes against the Blues in February 2017, the third time he had been forced to take extended leave from the game due to concussion since 2014.
"I would have dearly loved to continue playing rugby, but there are more important things in life than sport and I have decided to put my family first and hang up my boots," Goodes said.
"Although I am pleased to say I am now feeling good the medical advice and my history of head knocks suggests there is a risk there that's not worth taking."
The 26-year-old Goodes said he had received excellent support since he suffered his latest injury. Teammate James Broadhurst, a lock, announced his retirement last year due to similar concussion issues.
"I'd especially like to thank my wife Chelsea who has been there for me every step of the way, but also my past and present Hurricanes and Wellington coaches, teammates, management and medical staff, and all the fans, who have all been incredibly understanding during what was a difficult time," Goodes said.
"Rugby has given me a lot of great memories, which I will always cherish but I am now looking forward, not backward. Chelsea and I have recently welcomed our daughter into the world and I'm excited about what the future holds as I enter the job market."
Hurricanes coach Chris Boyd said Goodes, who played 60 times for the Hurricanes, would be a loss to the team on and off the field.
"Reggie was a very talented player. He had a great work ethic around his training and preparation and he was genuine in everything he did. He was universally respected by his teammates and his sense of humour in the team environment will certainly be missed.
"We wish him all the best for life after rugby and I have no doubt he will be successful in whatever field he chooses to pursue."
New Zealand Rugby General Manager Rugby Neil Sorensen said: "It's always hugely disappointing when an athlete is forced to retire prematurely, but it is encouraging to see more players like Reg reporting their injuries and being guided by our medical staff to ensure they are not put at risk.
"New Zealand Rugby continue to do an extensive amount of work to reduce concussion in our game and cases like this are a reminder that we need to keep working hard in that area. We can't eliminate the risk of a head knock, but we can reduce the risk and ensure players receive the best possible advice as they contemplate a return to play."