WARNING: The following contains spoilers for Demon Slayer: Kimetsu no Yaiba Season 2, Episode 18, "No Matter How Many Lives," now streaming on Funimation, Hulu and Crunchyroll.
The Hashira are dropping like flies in Demon Slayer: Kimetsu no Yaiba, as Tengen Uzui's retirement means that the Demon Slayer Corps has lost two of its most elite swordsmen in just a few months. Tanjiro, Zenitsu and Inosuke better get stronger in a hurry -- the Corps can't afford to keep pairing them with Hashira if those missions always spell the end of that Hashira's life or career. While Tengen proudly and a little smugly declared to Iguro that Tanjiro is on the way to becoming a Hashira, the battle with Gyutaro proved that Tanjiro still needs more time to grow -- time that the Corps may not have.
Thanks to the combined efforts of Tengen, Tanjiro, Inosuke and Zenitsu, an Upper-Rank demon has been killed for the first time in 100 years. While still a cause for celebration, the fact that the battle with the weakest of the Upper-Ranks destroyed an entire town and ended a Hashira's career as a Demon Slayer is not good, to say the least. Muzan Kibutsuji, the progenitor of demons, is many things, but he is not forgiving. While he's not particularly fond of most of his demons, he seemed to have a soft spot for Daki. Aside from that, the death of an Upper-Rank should infuriate him on principle if nothing else.
Even though the Demon Slayer Corps may be in hot water if Muzan decides to retaliate for Gyutaro's death, Tengen Uzui has unquestionably earned his retirement, as his battle with Gyutaro cost him a hand and an eye. Thanks to his Musical Score Technique, he was able to fight Gyutaro evenly with one hand, but that it took him so long to perfect it during the fight means it's not something he can always rely on to make up for the loss of his left hand. Tengen is a shinobi and a Hashira who's willing to give his life to defeat demons, so if he says he can't fight anymore, he can't fight anymore.
Iguro Obanai, a fellow Hashira whom Tengen had apparently called for backup, was distressed by the idea of losing another Hashira after Rengoku's death. So, if Tengen is willing to retire knowing how it will cripple the Corps, he must be certain that he can no longer fight at the level required by a Hashira. While Tengen's Upper-Rank-fighting days are surely over, he could almost certainly still kill lower-level demons with ease. Tengen's retirement doesn't feel entirely warranted by his injuries, but he also has a promise to keep to one of his wives.
A major factor of Tengen's retirement is that he wants to live peacefully with Hinatsuru, Makio and Suma. In a prior flashback, Hinatsuru was the one who suggested retiring if they ever defeated an Upper-Rank, as that would surely balance the scales of their sins that they've committed as shinobi. Tengen's childhood weighs heavily on him thanks to his father's sadistic shinobi training, and part of the reason Tengen became a Demon Slayer in the first place was to find something new to believe in. Now that he feels he's done his part, Tengen is ready for the next flashy chapter of his life.
Despite all his self-loathing, Tengen helped defeat an Upper-Rank demon that 22 other Hashira died fighting, and no Hashira has killed any Upper-Ranks in the last 100 years -- so hopefully, he will start to think more highly of himself in his retirement. Nonetheless, it seems Tengen's self-pitying claim that he's nothing special even as a Hashira was less a statement of low self-esteem and more based on fact. After all, Iguro referred to Gyutaro as "only" Upper Six, implying that Gyutaro would not have been overly difficult for the Serpent Hashira to defeat himself -- if he'd only shown up on time.