it may be that your lack of reaction makes her do it all the more... next time turn round and bascially '' tell her off'',
raise your voice a touch, warn her what you plan to do (i,e. police, authorities etc) show her you will not put up with it.
she may realise she is being out of order and stop
as someone else stated on here, some old people think they have 'earnt' the right to be obnoxious and rude, and that they fully intended to do so when they were old. it was jokily said but some people actually do that.
and some get preoccupied with trivial things because they have nothing else to do.
if you show her you are not pushover and an easy target she may stop
check out her mental issue first though, just in case it is not just her being a b1tch
old people do not just become kindly as they get older, they are essentially the same people they were when they were young