Overall, the Colts could have recouped $24.8 million - $12.8 million as a pro-rated portion of Luck's signing bonus from his extension in 2016 and another $12 million from roster bonuses he received in March. The two sides reached the settlement late last week, Schefter reported.
The gesture would be considered a thank-you to the quarterback for giving up his body for the team over the past seven years.
Among the injuries that Luck has sustained since entering the league are a torn abdominal muscle, a lacerated kidney, a torn labrum in his throwing shoulder, and most recently calf and ankle issues that he could not shake.
Colts owner Jim Irsay estimated that the retirement will cost Luck from earning nearly half a billion dollars in NFL wages.
"It's a tough thing, look it, he's leaving $450 million on the table potentially," Irsay said.