Ferguson made his shock announcement on Wednesday morning that he would be relinquishing his managerial duties at the end of the season.
Hughes, who played under Ferguson over two spells at Old Trafford, admitted he was initially shocked to hear the news but added: "As the hours have gone on you would probably say the timing is right for Sir Alex and United.
"They've had a great season, they've won the title and particularly bearing in mind that they have wrenched the Premier League crown from City which was mightily important for Sir Alex."
Everton boss David Moyes is the current favourite to step into Ferguson's shoes and choosing the next man is an action Hughes does not envy anybody having to make.
"It's a big decision for United," added Hughes, still out of work since being sacked as QPR boss in November.
"It's something they knew would happen one day and you'd imagine given the size of the club and financial implications of a change in management that their succession plans will be in place and things will probably now progress quickly."
Hughes joined United as a youth player in 1978, left for Barcelona in 1986 and was re-signed by Ferguson two years later before scoring 83 goals in 256 games over a seven-year spell.
The former striker paid tribute to the support he has received by Ferguson as a player and more recently as a manager.
"Anybody who's been in his company and had the pleasure of working for him, you are struck by his passion, drive and desire to win football matches and trophies," the 49-year-old Welshman said.
"That's just part of his DNA and you always sensed that being around him. As a player you felt an obligation to win football matches and if you didn't, you'd be quickly replaced."