"I think it's terribly sad to think you can't even go out walking around the streets in the middle of the day," she said.
The mugging comes as a retired Mount Maunganui couple appeal for help after a burglary that robbed them of including service medals.
Speaking to the Bay of Plenty Times Nana is pleading with the public to come forward with information to police to help catch the offenders, who she said were wearing dark clothing and red bandannas over their faces, and demanded money and brandished a knife at her.
Nana said she first saw the two offenders as they stood talking to each other in the alleyway ahead of her and initially had no concerns despite them wearing gang-coloured bandannas.
But as she walked closer and asked them twice to let her pass, their mood changed and the pair closed in blocking her escape, she said.
One offender swore at her and asked her if she had any money, she said.
"I replied 'yes' as I knew not to say 'no', and then one of them pulled at my handbag. I told him he could take my money but please don't take my asthma pumps. Then I saw the knife and I froze and closed my eyes. I was terrified and truly believed I was going to be stabbed."
If these little hooligans aren't caught next time it could be someone who gets off far worse than me. The person could have a heart attack and drop dead.
The victim said as she stood with her eyes closed she could hear the offenders rifling through her handbag looking for her wallet, and as they ran off she yelled out "please don't take my medication".
After dumping the bag, wallet and bank cards, the offenders ran off towards Taupo Ave with a significant amount of cash, she said.
During the tussle Nana, who also suffers from tremors, said she received a small cut to the top of her left hand.
She said the weapon used looked like a fish knife as it had serrated teeth.
A spokesperson at nearby Bernadette Lifecare said residents had been discouraged from using the alleyway unaccompanied because of its enclosed nature. The alleyway which is at least 100m long is bordered by a 1.8m (6 foot) wooden fence most of the way, meaning anyone attacked cannot be seen. A disgusted Taupo Ave resident said she used the alleyway two to three times a week, but was always a bit nervous because of the enclosed nature of the walkway, which had a dog leg, and the regular amount of rubbish, broken glass and tagging.
"I think it is a very sad and terrible thing to have happened to one of our elderly residents."
Detective Sergeant Trevor Brown described the robbery as "a cowardly act" of violence against an elderly woman who was walking home "minding her own business".
It was crucial these offenders were caught so it does not happen to anyone else, he said.
The alleyway is well used, including by parents with young children, and children going back and forward to schools and playcentres.
Nana said the cash stolen was a huge financial loss to her, and the robbery had knocked her confidence.
"If these little hooligans aren't caught next time it could be someone who gets off far worse than me. The person could have a heart attack and drop dead," she said.
Anyone with any information is asked to contact Tauranga police on 577 4300.