If you have a family of four, you will likely need at least a 40-gallon water heater. This should provide enough hot water for four people to take showers, run the dishwasher, and do laundry. If you have a larger family, or if you often have guests staying with you, you may need a 50-gallon or even a 75-gallon water heater. In addition to the number of people in your household, another factor to consider is the climate. If you live in a cold climate, you will likely need a larger water heater to provide enough hot water. Conversely, if you live in a warm climate, you can get by with a smaller water heater. Ultimately, the size of water heater you need depends on your family's needs and lifestyle.