Save money and energy by setting your water heater at 120 degrees. You won't run out of hot water sooner and it lowers the risk of burns, especially to children. At 120 degrees it would take almost 10 minutes of exposure to cause a serious burn, as opposed to 140 degrees where a serious burn can occur in about 6 seconds!
It is a myth that lowering the temperature on your water heater to 120 degrees will not kill germs when used on hands and dishes. The fact is hand washing is best done with warm, not hot, soapy water. When washed properly 120 degree water is quite hot enough to wash most germs away. With dishwashing most soaps and detergents are formulated to work best at temperatures of 120-125 degrees and dishwashers have heating elements designed to keep the water hot while washing.