Read, 33, has played 118 tests in the black jersey and has captained the team in 49 tests.
He was part of the victorious 2011 and 2015 teams and was named World Player of the Year in 2013.
Read is set to begin his 13th season of professional rugby in New Zealand when he returns to action for the Crusaders.
"He's been around for a while and I know his body has taken a good battering so from an international side of things to keep doing that he's obviously decided that the right time is this year and I guess the World Cup makes it an easy end point," McCaw said.
"He's obviously still interested in playing and Japan will be something different and the family will have a bit of a travel.
"Everyone's got different ideas what's for them when they finish. But good luck to him. I'm sure he won't be looking past getting this year spot on. Once you make a decision like that it makes it easier to focus on what he's doing."
McCaw added the key thing in your final season is not to get 'too nostalgic'.
"You do have to be careful if you think 'this is the last time for that' and get too nostalgic or whatever. You still want to put everything into each day so you can perform. Knowing the type of guy he is, he'll have no trouble I'm sure."
Read join Toyota Verblitz in Japan next year on a two-year contract after reported interest from French side Racing 92 and at least one unnamed English club.