Like other income, retirement pay is subject to federal income taxation unless wholly or partially exempted by statute. The federal government and individual states have established tax breaks for military members and veterans to lighten your financial load and ease your return to civilian life. If the retirement is for disability and all retired pay is tax-free, retirees are not required to report this income. Taxable income from retired pay does not include the amount of SBP deductions. Service members are taxed only on what they receive.
You can get both Social Security benefits and military retirement. Generally, there is no reduction in Social Security benefits because of your military retirement benefits. You'll get your full Social Security benefit based on your earnings. While you can retire as early as age 62, your Social Security benefits will be reduced if you do and won't be increased when you reach full retirement age. If you decide to apply for benefits before your full retirement age, you can work and still get some Social Security benefits. When you reach your full retirement age, you can earn as much as you can and still get all of your Social Security benefits.