If you keep your water heater permanently set to less than 120° F (49° C) and if you turn off the heater before Shabbat, you may use that hot water on Shabbat. But you may not lower the setting just before Shabbat and then use hot water from that heater, since the water in the tank will still be hotter than 120° F for many hours (or even a day or more) after lowering the heater temperature.
Note If you will be using a large volume of hot water during Shabbat, consult a rabbi since the heating element might inevitably be turned on and that would be forbidden on Shabbat.