My hot water heater has outlived its expected life cycle.

We don't replace until it has broke down. Your water heater may have several more years or it could break down tomorrow. Good Luck!

I go by the old adage "If it ain't broke don't fix it". If it works fine why replace it? If it's not banging, crackling, or making popping noises it can last a long time. Drain about a gallon of water from the bottom of the tank once a month to remove any sediment and your good to go.

If it is not causing problems wait and just keep an eye on it for leaks, not heating your water as well, etc. Replace it when it starts causing problems. Since you know you will be having to replace it, just start stashing cash away now so that you have it when needed and the funds will be at hand and don't have to take a big chunk out of the budget.

Depends on it's location. If it's in an area that if it fails will not cause damage to carpeting, wood floor's, etc. You can let it go but if damage is eminent I would be more proactive and get it replaced. My old house had A w.h. that was in there when I moved in and was still working 22 year's later when I sold it. It was an electric heater.

Another problem is if it fails will your family be able to cope without hot water for several day's until A plumber can be hired. I do my own maintenance, as that is my trade, and I have no family to worry about so if my w.h. had failed all I would have had to do is procure one from A big box store and haul it home.

I would wait until there is a need. We have been fortunate and ours have outlived their age very well

If your are getting rust then it needs changing right away. Some times, but rarely will a hot water tank go past its specified date. If you are afraid of water damage in your home then do it now. When you do change it place a drip tray underneath for the next time just in case it springs a leak when you are not home. One thing I do at least once a year is to put a hose on the bottom tap and drain off the sediment. This usually makes the tank last longer as the crud is not building up on the elements.

Water heaters are fickle beasts! The hot water output can decrease gradually or bingo, they just conk out. You must decide for yourself what risk you're willing to take and whether or not you could manage for a week or less of no hot water. People who have rough camping history can manage better than 'city folk' because they know the basics of a shampoo and shower with a gallon of water. Oh, yeah, water heaters have the ability to know whether you've got company or a dinner party planned!

I would start with draining it and removing the sediment, replacing the sacrifical rod.

You can also put a water alarm

Darn.... water alarms.... https://www.amazon.com/s/ref=nb_sb_ss_c_1_16?url=search-alias%3Dgarden&field-keywords=water+leak+alarm&sprefix=water+leak+alarm%2Cgarden%2C212&crid=2UHL00LEA91M6

Have you dained your tank every year? We replaced ours a few months ago. Heating water this ways forms fine crystalls from the heating process. My husband had not drained ours. It had a couple gallons of crystals. They had to wait till they got it outside to drain it. Was 15 years old and still worked,, but we replaced our washer and dryer and they would have to be moved to replace it later. Good thing we did because the bottom was ready to rust through. Our electric billcame down 30 dollars a month because the heater had to work harder because of crystals. Draining it yearly prolongs life of unit. A water alarm warns as the tank keeps on leaking.