401k tax rate at withdrawal

Help me understand this since I never hear this mentioned from all the 401k gurus. The common concern with 401k savings is that your taxes at retirement might be much higher then they are now.

For example lets assume that the tax rates stay the same as they are right now. Since all the money your deferring into your 401k today is taken out at the highest tax bracket (For me this is 25%). And lets assume the only income you have at retirement is your 401k savings wouldn't your effective tax rate be much lower because of deductions and the progressive tax system?

By putting money into my 401k I'm not paying 25% federal income tax on my 401k savings. But say at retirement I chose to only live on 40k/year this should put me in a much lower bracket correct?