The Manchester United defender was left out of the squad for this summer's European Championship, with fellow centre-back John Terry selected despite the court case awaiting him.
Terry was cleared at Westminster Magistrates Court of racially abusing Ferdinand's younger brother Anton while playing for Chelsea against QPR last season.
But the Football Association pursued their own investigation and Terry announced his international retirement on the eve of this week's hearing at Wembley, claiming the governing body had made his position in the squad "untenable".
That immediately gave rise to widespread suggestions Rio Ferdinand could be reinstated, despite Hodgson's insistence that he was left out of the tournament squad for purely "footballing reasons".
Shilton feels it is time to move on.
The 63-year-old, who won a record 125 England caps, backed Terry's Chelsea colleague Gary Cahill and Manchester City's Joleon Lescott to establish themselves as Hodgson's first-choice pairing.
Shilton told BBC Sport: "His time has gone. We have to look to the future and I would look to the youth. Cahill is someone I've always admired and I thought Lescott had an excellent Euros. At the moment, I'd go with those two."
Labelling Terry's retirement "premature", he added: "Reading the press, I think Roy Hodgson feels the same way. Terry was recognised not only for his playing ability, but also for his leadership qualities."