The former Real midfielder and coach insists the arrival of Kylian Mbappe won't offer cover for Kroos' retirement.
He said, "Mbappé is coming, but you lose Kroos... we forget that he is going to be a problem for Madrid.
"I have doubts about Madrid's midfield because Kroos was very important in the organisation of the game and Madrid is going to lose a lot of football without him when it comes to creating the game."
Schuster also said of Hansi Flick's appointment by Barcelona: "We Germans have always been well liked by Spanish teams, at least at the beginning.
"Flick is a coach who already knows what a big team is like, he had an incredible season with Bayern. For me, Barça's problem isn't the coach, no one can fix this even if you change him every year. It's a team problem: you have to look for quality to really fight with the top teams."