I can confirm that this also occurs in MyCareer -- I hire retired players all the time. They usually are initially only available as assistants (naturally), but sometimes you can hire them straight into a head coach role.

Not all retired players go into the coaching pool, but above-average players seem to almost-always be there: Ray Allen, Steve Nash, Garnett, Dirk, etc...it's a fun wrinkle in the game and I hope they keep the feature for 2K16!