Based on my experience visiting other people's homes and businesses, most people have their hot water heaters set too high. What's surprising, if you suggest that they consider turning down the temperature often times they get defensive. I think people consider hot clean water to be a luxury item and so to turn it down is like losing a part of their status or livelihood. So I hope to approach this logically and convince you it's worth turning it down.
Let's start off by looking at all the uses of hot water in your home. Hot water is piped to two appliances, the dishwasher and the clothes washer. It also goes to showers, baths, and sinks. That's it. All other places in the home with water (refrigerators, toilets, and all external hose bibs) are cold only. So let's look at each of these places hot water is used an evaluate if we truly need scalding hot water.
Dishwasher
The dishwasher is the easiest one to analyze, because it doesn't need hot water to work. All modern dishwasher have a built-in heater (the same one that heats up to dry off the dishes). This heater is turned on during the wash cycle to heat the water even more. So even if your dishwasher were connected to cold water it would wash just as effectively because it heats the water up internally.
Laundry
Many of us have been told for years to wash whites in hot water, certain clothes in warm, and dark colors in cold water. But these are old outdated methods. Modern efficient machines with modern laundry soaps wash almost all clothes great in cold water. There are very few clothes that need to be washed in warm or hot water. In fact, hot/warm water may actually cause more harm than good. Modern soaps use enzymes that are active between 60°F (16°C) and 75°F (24°C). Beyond that and the enzymes are less effective, and you're more likely to "set" in stains and damage fabrics. So hot or warm should only be used on special garments with special soaps.
Showers/tubs
When you take a shower or a bath, I doubt you'll do so using 100% hot water. Most likely you'd scald yourself. So you mix hot and cold to get the desired temperature. This means you could lower your hot water heater without having to take a colder shower. I would argue the ideal hot water heater temperature is when your shower/bath is nearly 100% hot water to still get the temperature you'd like. Anything more means you're just overheating the water.
Sinks
The primary reason people want hot water at the sink is to washing things; e.g. their hands, dishes, the floors, etc. Hot water helps kill germs and bacteria, right? Technically yes, but in practice no. The water temperature and time at that temperature required to kill germs and bacteria would instantly scald and burn you! If you've ever gone backpacking you know the rule is to boil the water for 5 minutes to kill anything in the water. The hot water coming out of your sink is well below the temperature required to kill anything, all you're going to do is burn yourself and not kill anything. That's what soap is for.
So hopefully I've convinced you that your hot water heater can be turned down. But how far, what temperature do you set it to? Few hot water heaters have an actual thermostat, most just have a high-low adjustment. Instead the way to adjust your hot water is to go to the sink farthest from the hot water heater and turn on hot water. Let the water flow over a thermometer. You want the water coming out of the tap to be 120°F (49°C). This is the industry recommended temperature to be hot enough for things like showers, but not so hot as to burn you. If you adjust your hot water heater down then obviously you need to wait hours/days before retesting.
When I made these changes to my hot water I was shocked. My hot water heater has an off position, vacation mode (to keep the water from freezing), and then a slider from low to high. To achieve 120°F (49°C) at the sink I ended up setting my hot water heater to the lowest possible setting above vacation mode. Not everyone's hot water heater will be the same, mine is only a few years old and it's a super efficient one. You probably won't be able to go as low as I can, but I have no doubt you could lower yours with no side effects.
Lastly, let's talk about the benefits of making this change. You'll save money, a decent amount too. Heating water takes a lot of energy, so if you lower the temperature you'll save money pure and simple. Between lower gas/electricity costs and using less hot water for laundry you'll probably save at least $100 per year. You'll also extend the life of your hot water heater. Most hot water heaters need to be replaced because of deposits that build up inside of them. So turning down the temperature extends the life of your hot water heater, which also saves you money. And lastly you reduce the chances of accidental burns from hot water - an even bigger concern if you have children in your home.
Hopefully reading this has encouraged you to evaluate your hot water heater. If nothing else, put a thermometer in the sink and turn on hot water to test and see what your current hot water is coming out at. You might be surprised!
