The Basics

• If your electric hot water heater is more than ten years old and isn't functioning efficiently, or if it's visibly rusted, you probably need a new one. If it's leaking, it might be repairable, depending on exactly which part of the heater is damaged.
  
  If water is pooling around your hot water heater, turn off the electricity in that area and call a plumber immediately. You definitely need a new appliance, and you don't want to run the risk of anyone getting hurt.
  
  

Repairs

• Some parts of an electric hot water heater can be replaced. A plumber can remove the thermostat, anode rods, heating element, drain valve and pressure-relief valve and install new parts. However, if the heater is badly corroded, the new parts might begin to leak. The high temperatures in the heater speed up the rusting process and, since it's already well under way, any new parts might not last very long. If the new parts fail, you'll need to replace the entire unit.
  
  Your water supply itself might contribute to rusting, since the chemical composition of water can be corrosive. Hard water, which is high in minerals, also damages a hot water heater. Using a water softener can help alleviate this problem in the future, but if your heater is already badly rusted, it's time for a new one.
  
  

Life Span

• The expected life span of an electric hot water heater is 8 to 12 years, with 10 years being the average. Some heaters last longer and some fail much earlier, due to factors such as those already mentioned, along with the heater's location and quality of installation. If the hot water heater is in a basement that becomes flooded, it might short out or be damaged by water. If it was improperly installed, such as placing it horizontally when the manufacturer didn't design it for that type of use, or placing it against a damp surface, it will have a much shorter life span.
  
  

Repair or Replace: Cost Effectiveness

• If your plumber tells you that he can repair your hot water heater, you'll want to consider its age, the likelihood that the replacement parts will fail again and the cost of the repairs versus the cost of a new unit. If the water heater is no longer under warranty and you spend money on repairs, you might have to spend more money for a new heater in the near future. If it's still under warranty, Consumer Reports.com advises that you get an estimate, and then consider the repair cost as opposed to the cost of having a new hot water heater installed. Keep in mind that warranties usually don't cover the cost of labor. If the labor for a repair "averages less than $50 per year for each remaining year of coverage," then have it repaired. If it's more than that, your best bet is to install a new one.