Having lost the title to Brazilian Amanda Nunes at UFC 200 in July, Tate was intent on forcing her way back into championship with a win over Pennington.
She hoped to await the winner of Rousey-Nunes at UFC 207, but the 30-year-old's world was turned upside down on November 12 when she was unable to overcome a determined Pennington.
"I planned on winning that fight and going on another title run, but I just knew," Tate said.
Asked if she had considered fighting on to earn a third bout with Rousey, Tate replied: "Of course, but it doesn't change the situation".
"Ideally, I would've loved for that to happen but it doesn't look like it's going to now."
Tate made no secret of her desire to see Nunes inflict Rousey's second successive loss on December 30, but she remains unsure how the fight will pan out.
"I guess what's really difficult for me to decide is what we're going to get out of Rousey," Tate said.
"Is she doing it because she wants to or is she doing it because she feels obligated? Is that knockout still in the back of her mind? Is she going to be punch-shy?
"I remember when I was skiing for the first time when I was five years old and I just blitzed downhill and had no fear whatsoever. The first time that I wrecked really, really hard is when I realised that this is really dangerous and things can happen to you.
"You don't realise it until you've fallen, so you wonder has that been put in back of her mind, is that going to affect her.
"I know that Amanda is a really solid fighter and she hits like a ton of bricks and she's a very worthy opponent.
"I want Amanda to win. She's a sweetheart and she's a good girl. I think she deserves it."
Tate will retire a champion of the sport, having reached the pinnacle in both the UFC and Strikeforce.
"There's still more that I would have liked to have accomplished," Tate added.
"I never thought I'd be feeling like it did at all ... ever. There's always someone else to fight or someone else to beat. But I look back on it (career) fondly. I had a great run. I spent half my life in contact sports and I'm still going to be in grappling and things like that.
"I actually have a grappling match on December 11 against Jessica Eye on Chael Sonnen's show and I'm excited to do that.
"I think this is going to be a whole new avenue to express myself as an athlete."
Tate is set to step into an analyst role with Fox Sports and remains content in retirement.
"I'm really happy right now," she said.
"I just came from Hawaii and now I'm in Melbourne and then I head to Sydney and Singapore after this.
"I'm being a bit of a gypsy at the moment and I'm seeing the world."
As for whether the door has been left ajar to return to the octagon, Tate quipped: "You never know, but at this point it's not something that I'm thinking about".
