Which statement about VA compensation and military retired pay is correct?

The statement that VA compensation can affect the amount of retired pay is accurate because of how these two types of payments interact. Veterans who receive both VA compensation and military retired pay may experience a reduction in their retired pay due to the offset rules established by law. Specifically, if a veteran receives VA disability compensation and also retires from the military, their retired pay may be reduced by the amount of VA compensation they are entitled to. This offset is intended to prevent double-dipping from the federal government for the same period of service.

Understanding this interaction is crucial for veterans who are considering their financial options after service, as it can significantly impact their total income. In contrast, the other options suggest scenarios where either no adjustment happens or that retired pay is inherently more advantageous, which does not accurately depict the nuances of how VA compensation and retired pay function together.