The tank is rusting. Replace anode rod or replace water heater.
Once the anode rod depletes, then the tank starts to rust.
IF you can replace the anode rod, it will stop rusting, and then flush the rust out of water heater.
This might buy more life with same tank, but old anode rods are pretty solid and even impact wrench might not loosen it up.
http://waterheatertimer.org/Replace-anode-rod.html
http://waterheatertimer.org/Clean-sediment-out-of-water-heater.html#flush
Loosen anode rod on new tank before installing, and then inspect every 1-3 years, and 1-2 years if water is softened.
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Hi,
If your electric hot water heater is not working...check out this tip about electric hot water heater problems
Electric Water Heater not Working
heatman101
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