Leaving his bike in the shallows and wading out into the waist-deep waves, Mr Waterson found an "exhausted" woman, barely able to stand.
He believed the woman's husband and boy's father had been walking further down the beach at the time and also quickly made his way to the dramatic scene, while two of the family's friends phoned emergency services.
Mr Waterson said while the boy was relatively unharmed, the woman was "blue with cold" and overwhelmed from swallowed sea water.
"I honestly thought that she would have a bad turn as we were getting her back ... "
Police and paramedics arrived shortly after and the mother and son, who were holidaying at the beach, were airlifted to Hawke's Bay Hospital by the Lowe Corporation Rescue Helicopter.
The boy was discharged later on Thursday night, while his mother was discharged yesterday morning.
"She deserves the medal, not me," Mr Waterson said of the brave mum.
"She did a marvellous job of letting the rip take you out to sea and then coming back in with the surf ... Michael Phelps couldn't even swim against those rips."
The former competitive swimmer, who was a national champion in 1957, said he was "so pleased that she survived" but was troubled by the high drowning statistics in New Zealand waters this summer.
There have been 18 drownings this year, as of January 29, up from a total of 10 at the same time last year, while eight of the deaths have come at unpatrolled beaches such as Mangakuri.
"We just need something to warn them of what's happening at the beach that day," he said, when recalling the 35 years he had lived in the area, during which several lives were lost in the nearby waves.