Yes but if they had been paying less in taxes their entire life they would probably have more to live off of in old age.So, you suggest investors will go for munis. Fair enough. I'm sure that you know the rate is only part of your return. Price is a big factor as well. Your yield is calculated by dividing what they pay you by the price you pay for the bond.
So, more people want munis. What does that do? It drives up the price, or allows the bond to be issued at a lower rate. Both lower the yield. Ouch, you've just caused another old person to choose between food and medicine.