The 2009 world champion will step back from racing at McLaren after the weekend's Abu Dhabi Grand Prix, but the team does have an option for his services in 2018, although it is unlikely he will return.
"If the fire and the commitment and the passion and the drive are still there, why take a year off?" he told the Daily Mirror.
"I don't get that. Sabbaticals do not work," he insisted.
"If I was his manager I'd be doing everything to say 'Jenson, you've had an unbelievable time, let's pull the shutter down, move the page on and don't be afraid to retire'," said Jordan.
While admitting he wasn't one of the all-time great, Jordan said that Button will still be remembered as an F1 legend.
"He was a worthy champion," said Jordan. "If you are talking the top two or three drivers, the Schumachers and Sennas, then he is not with them.
"But he will go down as one of Britain's best drivers and one of Britain's greatest sportsmen and that's how he should be remembered."
Bahrain International Circuit - Winter testing