Waugh's anticipated decision means New South Wales will be without both Waugh twins, Mark and Steve, next summer as well as coach Steve Rixon, who will coach Surrey in the English county league.
Mark Waugh, 38, retired from Test cricket in October 2002, but has played for his state side since then and was a member of NSW's Sheffield Shield and domestic Cup winning teams last summer.
He played 128 Tests at an average of 41.81 and took 181 catches -- the most in the history of Test cricket.
NSW have only three home games left before the Waughs depart: this week's Sheffield Shield fixture against South Australia, next Sunday's One-dayer against Tasmania, and another Shield game with Queensland from March 4-7.
Steve, who retired from Test cricket after the India series last month, admitted after NSW's eight-run One-day win over South Australia here on Sunday that motivation was fractionally harder to find now his international playing days were over.
"It's certainly different when you can't play for Australia," said Waugh.
"I'm still giving it 100 percent but you haven't quite got that two, three percent edge when you're striving to play for Australia. Once you haven't got that opportunity, it sort of drops off in that regard just a fraction. It's just a fact."
South Australia fights back