The 29-year-old is being targeted by Liverpool but his former Etihad team-mate, who is currently on loan to Fiorentina, believes he should consider a transfer to Italy or Spain
Liverpool are leading the race for the 29-year-old, who is out of contract at the end of the season, meaning he has been free to speak to other clubs since January.
Richards, whose contract with City also expires this summer, is currently on loan at Fiorentina and feels Milner should consider joining a team in Spain or Italy.
"James Milner is up there with the top midfielders in the world. A lot of people say he’s not amazing at one particular thing but he never lets the team down and Man City are a better team when he plays," Richards told talkSPORT.
"If the likes of Barcelona, Atletico Madrid and Real Madrid or Juventus and Roma in Serie A want you, then I don’t see why you wouldn't move away.
"Juve have got some of the best players in the world at the moment. Everyone wants to better themselves in their career.
"Milner is someone who is too good to be sitting on the bench. He deserves to be playing in the starting 11 somewhere. That will be one of the key factors in his decision.