One who is honourably discharged from service

Answer: Option B

One word substitute is Emeritus.

Retired: having left one's job and ceased to work.
Emeritus: (of the former holder of an office, especially a university professor) having retired but allowed to retain their title as an honour.
Relieved: no longer feeling distressed or anxious.
Emancipated: free from legal, social, or political restrictions.