Waugh was struck on the arm by India paceman Ajit Agarkar and retired hurt on nought in Australia's first innings of the third Test in Melbourne before returning to share a 65-run partnership with Ricky Ponting, who made a career-best 257.
"At the time I obviously thought I had broken my arm. Whilst the lump looked ugly, that wasn't the problem, it was gripping the bat," Waugh said after his side cantered to a nine-wicket third Test win on Tuesday and levelled the series at one-all.
"I had this sharp pain down my arm and I thought 'this might be it'.
"I was always going to get back out there at some stage (in the Melbourne Test), but I didn't really know whether I'd make it to Sydney."
Waugh, who had announced before the series began he would retire after the match at his home ground in Sydney, said he was now looking forward to the game that will bring down the curtain on his illustrious career.
"That's good, you want pressure. You want the occasion. The best teams and the best players lift to the big occasions," said Waugh. "The more at stake, the better we play.
"The last six Test matches against India have been all great contests, you couldn't have had better cricket.
"We've lifted in this game and we've come back well. In day one we were in trouble (with India 329 for four) and we fought our way out of it.
"I don't know what's going to happen in Sydney, but I know it's going to be a good match."
Waugh, the game's most-capped player with 167 Tests, is also its second-leading Test run-scorer and most successful captain.
He led Australia to their 1999 World Cup success and has guided the team to the top of the Test rankings, but the 38-year-old said the match starting on Friday had more than just personal glory at stake.
"I really am more concerned with the side. I don't want to go out a losing captain," Waugh said.
"I did that in my one-day career, losing the last series I played in (a triangular series involving New Zealand and South Africa in 2001-02)."
