The 35-year-old is due to appear at a press conference on Thursday to explain why he no longer wants to be considered by national boss Brian Ashton.
Dallaglio will finish his playing career altogether when his Wasps contract expires at the end of the season.
It is the second time the World Cup-winning number eight has stepped down from the international arena - he also retired in 2004 before making a comeback.
But with the end to his 85-cap England career seemingly irreversible this time around, Beaumont believes Dallaglio has chosen the right moment to step aside.
"I think from Lawrence's point of view it's probably about the right time to go - he's done everything in the game," Beaumont, who won 34 caps, told BBC Radio Four's Today programme.
"There's not many guys that have lifted the Premiership, played on winning Lions tours, lifted the Rugby World Cup.
"With World Cups, international careers go in cycles, and you'll see teams that want to build for the World Cup in that four-year cycle."
Beaumont, who led England to their first Grand Slam for 23 years in 1980, believes Dallaglio deserves to take his place among his country's greats, despite the controversies which have sometimes dogged his illustrious career.
"He was a top player without a doubt," said Beaumont, who is now a member of the International Rugby Board's executive.
"He took over from Dean Richards who was a great England player at number eight.
"As a young lad he established himself - not only as a great player but a leader, a strong man. You can still see it now that when he plays he is a very outstanding leader.
"You've only got to watch him play any game for Wasps, he is a one-club man as well. He must have had plenty of other offers to go and play all over the place but he stuck with Wasps."