As a pure devotee, Mahārāja Ambarīṣa was liberated in any condition of life because, as enunciated by Śrīla Rūpa Gosvāmī, a devotee is always liberated.

īhā yasya harer dāsye karmaṇā manasā girā nikhilāsv apy avasthāsu jīvan-muktaḥ sa ucyate

In Bhakti-rasāmṛta-sindhu, Śrīla Rūpa Gosvāmī thus instructs that if one’s only desire is service to the Lord, he is liberated in any condition of life. Mahārāja Ambarīṣa was undoubtedly liberated in any condition, but as an ideal king he accepted the vānaprastha order of retirement from family life. It is essential for one to renounce family responsibilities and fully concentrate on the lotus feet of Vāsudeva. Therefore Mahārāja Ambarīṣa divided the kingdom among his sons and retired from family life.