Most hot water heaters have a default setting of 140 degrees. Unfortunately, that’s too hot for most people, and that temperature can burn skin. Setting your water heater to 120 degrees is not only safer, it can save electricity.
Generally, the most efficient water heater temperature is the lowest temperature to provide the hot water necessary. For most homes, that is 120 degrees, because dishwashers now have built-in heating boosters to raise the temperature to the necessary 145 degrees for sterilizing dishes. Sinks only need 105 degree hot water for cleaning hands.
-From the U.S. Department of Energy