The 37-year-old Sinclair, who struck a double century on debut, said he couldn't support wife Tina, son Liam, 4, and daughter Holly, 3, on six months of cricket pay a year.
The staff at the Central Districts, for whom Sinclair played, was shocked when the former Black Caps revealed to them his decision.
This week Sinclair walked into Work and Income New Zealand in Napier to sign up for the unemployment benefit.
"The reality is, this is what it's like," Sinclair told the Manawatu Evening Standard.
The Work and Income said Sinclair, one of New Zealand's most prolific first-class batsmen with 36 centuries alone, might be able to work as a motivational speaker for those seeking work.
"It has been quite a tough decision to make," Sinclair said. "I was very keen to go another season. I would only be 38. It has been very hard to look for some sort of meaningful employment."
Sinclair is looking forward to a career in business, client or retail management, team-leading or motivational work.
Sinclair could have played until he was about 40 but whenever he has applied for winter work, employers have known he would be around for only six months.
"I had to make a conscious decision to give up the game to make myself more marketable," he said.
Sinclair feels cricket doesn't provide a career, even in coaching. He sees coaches looking for work, New Zealand has only six first-class associations and he is reluctant to drag his family around the world.
"I would rather get out on my own terms. I have never brought the game into disrepute and I can walk out with honesty and integrity."
Sinclair struck a double century on his test debut against the West Indies in 1999, and 204 against Pakistan the following summer.
"I have been a little mismanaged through my career," he said. "The many New Zealand team coaches came in with new ideas. I felt I had to change, whereas if I had played my natural game, it would have worked out better."