Retired military are not civilians.
A lot of legalize in the details but "retirement" pay means they can call you back any time they want. More like a retainer.
If they're not civilians, then they follow the customs and protocols of their service branch. I was in the Army, and they taught us to stand to attention to honor the colors if we were in civilian clothes.
That's exactly right. To prove a point, Arlington Cemetery is open for burial of military personnel, active and retired. As regards the hand salute, I believe it's appropriate for all military personnel, including retired.
Thank you for your service to our country.
Retired military ARE civilians, though. Thinking that Uncle Sam is going to call you old guys back is like wearing a jersey to a sporting event, mere wishful thinking.
After I got back to the States, my future Father-in-Law kept on making mouth-noise about how the Marines could recall him to go to Iraq. He retired in the mid-80's, but I think he still fantasizes about it...
A veteran is not necessarily retired, either.