He will however be allowed to continue his punditry work with SKY television, and has a clause freeing him from his contract if a coaching role at a bigger club is offered.
37-year-old Beags says that he is still hoping to play beyond this season, and is also setting up a business with his wife.
He told the Scunthorpe Telegraph: "It was not a money decision because there's none around in the third division, it's as simple as that.
"The club said to me I would need to take a 60 per cent wage reduction but they have given me a chance to work on other things and that won't take anything away from my most important business as a player."