Installing timers can save energy in some cases, but not always:
A $40 timer can automatically turn off an electric heater . . . after you go to bed, and on again right before you get up. These don't save as much money as you'd expect, though. That's because a typical electric water heater only runs about three hours a day anyway, and modern energy-efficient water heaters run only 1.3 hours or so. . . . (In fact, if your heater was made after 1998, it's possibly not worth using a timer at all.) . . . A timer for an old (pre-1998) heater will save about 25kWh/mo. for a family of two using 40 gallons a day with the heater off four to six hours a day, but only 14kWh/mo. for a family of four using 80 gallons a day.There's also a nice tidbit about health considerations when setting the temperature on your heater:
Bacteria fram Legionnaires Disease can grow in water up to 122°F, so many people set their heater tanks to at least 123°F.