When It’s Time for a Water Heater Replacement

Learn some basics about of water heaters, like when to repair or replace, before you hit a major snag.

Photo of a gray storage-tank water heater, an example of a replacement for an old one.
Image: Maggie Stuart for HouseLogic

Water heaters are not an issue — until that first icy shower hits you or you find a giant puddle in the basement. Then you have to think fast: Repair or replace?

If it’s a conventional storage-tank water heater nearing the end of its eight- to 12-year life, replacement is obvious. New models are usually more efficient and can save energy costs over the life of the unit. However, if your water heater is only a few years old, repair may be the way to go. Not sure whether to repair or replace? Here’s help to decide.

How to Diagnose Water Heater Woes

Conventional water heaters are simple. Cold water enters the tank and an electric element or gas burner heats the water. A thermostat regulates the temperature, usually 120 to 140 degrees. As the water heats, pressure builds inside the tank. When you turn on a tap, pressure sends hot water out the faucet.

Because water heaters contain few moving parts, only a few things can go wrong.

  • The pilot light on the gas water heater flickers out.
  • The circuit breaker for an electric heater trips.
  • The burner or heating element fails.
  • The thermostat breaks.
  • The valve sticks.

Repairing or replacing any of those parts is relatively inexpensive: $50 to $350. But if the tank is more than 10 years old, or if it’s leaking, a new water tank likely is in your future.

When Replacement Is Your Only Choice

Over time, water minerals react with steel, corroding water heater tanks. When water heaters spring a leak, repair isn’t an option.

On the bright side, modern water heaters are far more energy-efficient than older models. Manufacturers now inject foam insulation between the tank and its outer shell, increasing heat retention. New glass liners reduce the risk of corrosion in tanks.

Water heater installation or replacement costs $600 to $2,800 for a standard gas tank.

Tankless and solar water heaters offer even bigger savings and also qualify for a federal tax credit. These products could cost more to buy and install, so consider payback carefully. Here's a breakdown of total costs including installation:

  • Tankless gas: $700-$4,600
  • Tankless electric: $600-$2,500
  • Solar water heater: $3,000-$9,000

Factor in Hidden Costs of Water Heaters

Even with conventional water heaters, replacement might not be as simple as hauling out the old and hooking up the new. Many local building codes now require you to upgrade the following:

  • Water heater mount
  • Size or type of venting system
  • Drain pan underneath the heater
  • Supply pipes
  • Before starting work, ask your installer to outline all costs.

You may be thinking about installing a water heater yourself to save some money, but keeping it up to code can be challenging, and risking code violations isn't worth it, according to Angi. Code violations can result in penalties, void your water heater warranty, and create life-threatening risks to your household.

Maintain Your Water Heater

Whether you repair or replace, water heaters will perform better and last longer if you flush the tank once a year to remove sediment. A bonus: Without all that gunk inside, your water heater will operate more efficiently, saving you money.

Also, check the anode rod — sometimes called the sacrificial rod — every three years. This aluminum or magnesium probe is inside the tank and collects corrosive elements. It should be replaced when caked or eaten away, and a new one costs $20 to $50. If you hire a plumber to replace an anode rod, the cost is about $200 to $300.

Stay on top of these simple maintenance tasks and you can avoid thinking about water heaters again for a long time.

Joe Bousquin
Joe Bousquin

Joe Bousquin 's work has appeared in the Wall Street Journal, Kiplinger's Personal Finance, and Men's Journal. He owns a 79-year-old home in Sacramento, Calif.