He told BBC Radio Manchester: "It's a difficult one as if you watch him play, and watched me play in the last few months, there is a complete difference.
"If I was playing at the ability level he's got and the contribution that he still makes in games, I'd carry on."
He added: "I look at him as a Man United fan now, and a friend as well, and I want to see him play."
Scholes made his United debut in 1994 and has made 675 appearances for the Old Trafford outfit, scoring 150 goals.
"Paul's his own man, he won't be influenced by what I say or by others," continued Neville.
"Obviously the manager will be speaking to him and he'll come to the right decision for himself and his family."
Sir Alex Ferguson persuaded Scholes to sign
a new one-year contract last summer,
after expressing doubts as to whether he should continue playing.
He retired from international after Euro 2004, at the age of 29, to focus on playing for his club and rejected an offer to come out of retirement from Fabio Capello for the 2010 World Cup.
Neville also insisted he did not regret
his own decision to retire
, after his former club clinched their 19th league title at Blackburn Rovers on Saturday.
"Obviously you'd love to be out there for the rest of your life, but I'm content with the decisions I've made," he said.
"I had no choice. My level of performance wasn't to the level and the standard these lads have achieved.
"You see the way in which Fabio and Rafeal have developed and I was clogging things up.
"These lads are good enough to go and play and they're playing at a fantastic level now and are getting great experience.
"They're going to play in European Cup finals and that serves the club for the next ten years.
"If I'd had been at that level I would have carried on believe me, I wouldn't have given it in for the world, but I wasn't at that level that they were at."
Source: BBC Sport
Source: BBC Sport