Jurgen Klopp’s side dropped to second place over the weekend after being held to a 0-0 draw by Everton in the Merseyside derby.
They travel to Bavaria to face German champions Bayern Munich a week on Wednesday in the second leg of their last-16 clash, after the first leg finished goalless.
Neville believes that Liverpool could benefit from being eliminated at this stage in order to keep their players fresh during the run-in, with Manchester City currently one point ahead of them in the table.
"Getting points on the board is a big advantage,” he said on the Gary Neville podcast.
“I always thought that if Liverpool could win the league this season then they'd need a clean fixture list.
"I'm going to say it: go out against Bayern Munich. That sounds like madness.
"Of course, you'd never play to lose a game, but it will be in Liverpool's favour if they have a clean run as they can get everyone fresh. City have got a couple of FA Cup games, where Liverpool could go five or six points in front. That's tough to pull back in the closing weeks.
"This title race is still 50-50."
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