One of the two suspects was also wounded.
The incident began at the intersection of Prospect and Elm streets and ended on Lafayette Street, where one of the suspects crashed his getaway car and was subsequently arrested.
Police were processing the suspect's station wagon late Friday morning and early afternoon.
The victim was also armed.
"As he got out of his car, he was approached by two suspects, holding guns," Newark Detective Hubert Henderson said. "A shootout ensued. The retired cop was hit a couple of times. He's at the hospital. One suspect fled on foot and is still at large. The other one got into his car and fled the scene and crashed moments later. He was found with several weapons in his possession. He was also wounded, and he had the monies from the robbery in his possession."
The incident happened around 11 a.m. Henderson said it appears the suspects knew the delivery was to be made and were waiting for the victim to arrive.
Nearby Lafayette Street School was on lockdown since the other suspect remains on the loose.
The retired officer is hospitalized, but is expected to survive.
The New Jersey Cop Shot program run by the New Jersey State PBA is offering a $10,000 reward for information leading to the arrest and conviction of those responsible for the shooting.
Anyone with information is urged to call the Department's 24-hour "Crime Stoppers" anonymous tip line at 877 NWK-TIPS (877 695-8477) or NWK-GUNS (877 695-4867.