Set your water heater temperature to 120 degrees Fahrenheit for optimal safety and efficiency. Gas heaters have a temperature dial on the gas control valve. Electric models require turning off the breaker then adjusting the thermostat behind the access panel using a flathead screwdriver. Adjust both upper and lower thermostats on dual-element heaters. Wait 2 to 3 hours then test at a faucet using a cooking thermometer. Higher settings increase scalding risk and energy costs.