Over time, a water heater will naturally require some maintenance, there may even be a few visible signs to show this. For example, you may notice pooling water around the heater or showers suddenly turning cold. Even if the water heater does not display any visible signs of disrepair, it's still a good idea to consider its age before spending a lot of money on maintenance costs.
Another thing that will help with your decision to repair or replace the water heater is the warranty. Is your current water heater still under warranty and if it is, are you only covered for replacement parts, or are labor costs included as well? These costs can really add up, so it is good to find out. Consider one part that commonly needs to be replaced, the sacrificial anode. Replacing this part can be a difficult task and the water heater can be damaged if it is not done properly, it could also void the warranty. So, if you have a very old water heater and this part needs to be replaced, it may be wiser to purchase a new water heater instead.
A further way to decide whether or not to replace your water heater is to calculate how much money you are spending each year to keep your current water heater maintained. If you find out that it is more than 10 percent of what it would cost you to buy and install a new one, then it is time to think about replacing it.
Finally, if you are having trouble deciding what to do, why not have the water heater inspected? It will help you to find out what kind of condition it is in as well as how long you can expect it to last.