According to the US Department of Energy, a temperature of 120 degrees at the tap is adequate for most household chores with a minimal danger of scalding and maximal energy efficiency.  However, that is the temperature at the tap, not in the tank.  Tank temperature should be no less than 130 degrees to prevent bacterial growth, such as Legionnaires disease. 

Adjusting tank-type electric water heaters...

The temperature of an tank-type electric water heater is controlled by a thermostat.  The thermostat has a visible scale and is adjustable by turning the control to the desired temperature.  The typical thermostat control is adjusted by using a screwdriver. 

Adjusting gas water heaters...

Unlike electric water heaters, gas water heaters have one heat source and one temperature control... near the bottom of the tank.  Some gas water heaters have an exposed thermostat control which can be set to the desired temperature by rotating it.  A few have the control concealed under a plate that can be moved aside to make the adjustment.

GOING ON VACATION?  Lowering the temperature will save energy and money.  Turning the water heater off will save even more.  However, if you don't want to or don't know how to relight the pilot light, don't turn the heater off!