Set your water heater to 120°F and check it with a meat thermometer
Added
Run the hot tap nearest the water heater for about 3 minutes, fill a mug, and check it with a meat thermometer. If it's well over 120°F, turn the setting down, using your manual to match the dial marking to 120°F. On an electric unit, switch off its breaker before opening the thermostat covers.
The result
Result: DOE Building America Solution Center: the EPA recommends 120°F to prevent scalding, and turning it down can save energy and may help the heater last longer by slowing mineral buildup and corrosion.
Note: Electrical and gas safety: turn off power at the breaker before opening an electric water heater's covers, and follow your unit's manual. Call a licensed professional if unsure.
Source
DOE Building America Solution Center (PNNL) (opens the original source in a new tab). Check it for the latest numbers before you act.