IMO it's time for Ancelotti leaves from the club respectfully. He has been helping Madrid a lot to get so many trophies, and i think it's not that bad to replace him with a new capable coach. I hope they will be named some good coaches to replace him. It will be exciting to have Xabi, Zidane or even Klopp to be on their list.
I valued Ancelotti as a genius coach, but it seems he's tactically bad now. He can't still remain as Madrid's head coach with monoton tactic, which affected his club a lot. There must be a new coach with good creativity to continue in managing the club.
Although it is not certain, Ancelotti is a great coach who has given many trophies. He is old enough to think about retirement but I think he can still give some trophies to Real Madrid this season.
La Liga has been thinning for Real Madrid after Real Madrid was eliminated, but Ancelotti can still hope for the Copa Del Rey trophy and the Club World Cup.
If I could vote in a poll whether Ancelotti should retire without having to return to coach the Brazilian national team which is rumored, I would vote, it is better for Ancelotti not to accept offers from any clubs or national teams.
As a coach who is already very experienced, take a break.