Does retirement get you out of fighter contracts?

No. Most contract have a specific fight number tied to them and not a time limit so...

the contract gets reactivated if the fighter decides to come back

Like if manny had a few fights scheduled and then said "nah i'm done guys, peace". Can Arum the slave driver say "not so fast, kido". No, but if you attempt to come back you are still obligated to that promoter for the remaining fights. Retirement is a like a fighter being injured for a while - it puts the contract on freeze.

You can flat out retire or not fight whenever you don't want. But most fighters can't afford that luxury. Arum the snake was trying to force mikey to sign an extension but mikey ended up winning

Like if manny had a few fights scheduled and then said "nah i'm done guys, peace". Can Arum the slave driver say "not so fast, kido". He can't be told when he can and can't retire, however he may have to pay back a portion of any advances he got. If he ever decided to return, I'm pretty sure the contract would then be reinstated.