Getting inside Lin Dan's head... I think he wants to retire and let Chen Long/Wang Zhengming compete for the 2016 gold medal. I think he wants to pass the torch to the next great Chinese player.
But if LCW continues to play, I think that Lin Dan doesn't believe that CL or WZM can beat LCW. So to prevent LCW from winning the gold medal, and to ensure that China wins the gold, i think Lin Dan would compete. His goal of playing is completely based on the LCW threat to Chinese dominance of Men's singles. He doesn't want LCW to get a gold medal without having to go through him.
Let's hear from the horse's mouth. A couple days ago, when asked by the press during his book autograph session,Lin Dan said he is keen on competing in Rio'16.
He explained that he is taking this six-month break for his wedding and to reorganize himself and rejuvenate his health the better to strive for another four years. During the break, he will communicate and discuss with his friends,family,mentor(s) and coaches on the likely problems and issues he might face going forward and prepare himself well for it. However,he emphasized he is not one to let others plan his life and decide for him as he has his own thinking that drives him on.
At the same time, he seriously wants to do his part to promote the sport of badminton which he strongly feels is every sportsperson's existence and true value. Actually,four years ago after winning Beijing Olympic gold,he has started to give much thought to his goal in life. He realised that Olympic gold and championship titles aren't and should not be the only measure of his worth. He plays badminton simply because he loves the game naturally.