If your water is still coming out hot, you may assume that there's no reason to replace your water heater. Its job is to heat up your water, and it is clearly still doing that. But while putting off your water heater replacement 'till cold water runs from the tap may seem logical, it's not usually the best choice. If you wait until the heater fails completely, you'll have to do without hot water for at least a few days until your plumber can install a new one. At the very least, this means cold showers. In the winter, it can mean burst pipes!
A smarter approach is to keep your eyes peeled for these signs that your hot water heater is about to fail -- and have it replaced before it does fail.
1. Rusty water
When you turn on the hot water, does the water have a rusty or yellowish color for the first minute or two that it runs? While this can be a sign that your pipes are corroding, when it only happens to the hot water (and not the cold) it is more often a sign that the inside of your tank has begun to rust out. Wait too long to get a new one, and the rust may work its way through the water heater, leading to a really, really big leak.
2. Uneven water temperatures
Does your hot water sometimes feel scalding hot and other times comfortably warm? This means your water heater's thermostat is on the fritz. It may not be long before it fails completely, leaving you with nothing but cold water.
It is normal for your water to be only lukewarm if you emptied the tank and then only let it heat up for a few minutes before running the water again. But if the tank as had an hour or longer to heat up and is still just marginally hot where it would usually be scalding, this is a sign of impending failure
3. Water on the floor around the water heater
Even a few drops of water on the floor around your water heater should be cause for concern. It doesn't matter if the tank still gets your water hot if it's causing water damage to your basement in the process! You may get off lucky and your plumber may be able to replace a valve so you can get another year or two out of the tank. But if your tank is 10 years old or older, count on replacing it when you start noticing small leaks.