Smith will spend this winter in Ottawa with his family and might be used in a consulting or coaching capacity by the Senators during the regular season.
With Smith retiring, his $2.6 million cap hit is removed for the coming season, which is a significant boost for Murray, who was over the salary cap when he signed free agent forward Alexei Kovalev in July. With Smith's money off the books, Dany Heatley could re-join the club without Murray having to make any other moves.
To me, that about sums up why he chose now.
Video of the press conference from TSN.