Retired military pay is a defined-benefit pension paid monthly for life once you meet the service requirement (generally 20+ years for a standard retirement, with different rules for disability and reserve retirements). See our pay calculation overview for how the actual formula works.
Cost-of-living adjustments
Retirement pay is generally adjusted annually based on the Consumer Price Index, similar to Social Security COLAs, to help it keep pace with inflation over a multi-decade retirement.
State tax treatment varies enormously
Whether your state taxes military retirement pay is one of the biggest factors in your real, spendable income — some states tax it fully as ordinary income, some exempt it partially, and a growing number (including Arkansas) exempt it entirely. This is worth factoring into any relocation decision alongside housing costs.
It's separate from VA disability compensation
Retirement pay and VA disability compensation are administered separately and, depending on your disability rating and whether you qualify for Concurrent Retirement and Disability Pay (CRDP) or Combat-Related Special Compensation (CRSC), may or may not offset each other. This is a detail worth getting confirmed directly through the VA or a benefits counselor rather than assumed.
Relocating to Arkansas specifically? See our Arkansas relocation guides.