The former Storm captain was forced into medical retirement after 10 seasons due to a debilitating back injury that meant he had to take a cocktail of painkillers to get through last year's grand final.
Welch, now struggling to put on shoes, is set to undergo surgery.
The 30-year-old's career was limited to 163 games after he endured three ACL injuries, a ruptured achilles and multiple concussions, including one last month during pre-season training.
"It's just been the best time - I know I've had some injuries and we've lost some grand finals, but it's seriously been the greatest joy," Welch told AAP.
"I was really trying my best and I think that's the frustrating thing, probably the last two years since I've come back from the achilles I've tried my hardest to apply myself physically and get back and I've just struggled."
One of his knee reconstructions ruled him out Melbourne's 2017 premiership and he was part of three losing grand finals, only lifting the trophy in 2020.
He felt he could now miss another title, rating the current squad, with the recruitment of young Wests Tigers prop Stefano Utoikamanu, the best he had seen at the club.
"It's really shattering because it's a phenomenal squad we've got," said Welch.
"It's probably the best squad I think since Cameron Smith left, so I'm so high on what this team can do and obviously disappointed that I'm not going to be a part of it.
"You bring a guy like Stefano in; I think when he arrived I knew it was probably a good time for me to exit.
"He's a really phenomenal athlete, he just moves so well, and he's a skilful guy."
A teary Welch told his teammates, including his best mate Cameron Munster, on Wednesday morning, saying he will miss the camaraderie of being part of the Storm more than being on the field.
That was reinforced when he was given time off to contemplate his future and travelled to watch Australia's first Test against Sri Lanka.
"I saw Steve Smith's 10,000th run and it actually hit home a little bit because after they won that first Test, we bumped into the team and they were having a few beers and dinner," said the former Queensland State of Origin representative.
"It made me realise I'm really going to miss those moments - the footy is great, but also it's just the moments of your teammates bonding.
"The relationships and the memories, you know, the bus rides, and the card games and the hotels, roommates - that's probably what I'll look back on more fondly than anything on field."
Armed with a Masters degree in commerce, Welch also served on the board of the Rugby League Players Association and was integral in negotiating their most recent pay deal.
After a holiday he hoped he would remain part of sport in an administrative or commercial capacity, with an NRL club's CEO role part of his long-term future-thinking.
"I like to think I've tried to prepare well for this moment, but it's still daunting and no doubt, still pretty emotionally challenging," he said.
"I haven't made this decision with something that I've got to go to, it's more kind of been a bit unexpected.
"But for me, footy's been a great lifestyle and a great job but it's not my identity, I like to think there's a bit more to me.
"I was really cognisant, there's other sides that I need to prioritise and sacrificing my body, I guess it probably reached a point where it wasn't worth it."
