This is a difficult question because there are no easy answers. Different schools of therapy have different standards about boundaries. Some are clear that a client and therapist can never, ever, create a friendship. Others suggest that after some period of time, like a decade, it is possible for the relationship to shift to one of equality. But I think most therapists agree that making that shift is difficult at best. Compounding the difficulty is that we are discussing a therapy relationship that happened 40 years ago when, at least in some schools of therapy, the concept and importance of boundaries was being challenged.
There was something about your younger self that pulled at your therapist’s heart so she offered financial help that is outside the bounds of usual treatment. Having done that, it may have been difficult for her to know when to stop. I’m thinking she started to disclose her life to you after 20 years in an attempt to put the two of you on more equal footing.
To my thinking, the most important statements in your letter are that you are stressed and that you have struggled with the relationship for years. But just cutting off the relationship leaves you without resolution. For that reason, I do think you need to talk about it with her if you can.
It’s possible that she is unaware of your feelings. It’s possible that she feels as obligated to the relationship as you do at this point but doesn’t know how to end it without hurting you. It’s possible that she doesn’t understand that keeping in touch might remind you of an 18 year old self that perhaps you would like to leave behind. Or something else.
Meanwhile, I’m guessing that you haven’t wanted to hurt her feelings either. Or maybe you thought that ending the relationship would make you seem ungrateful. Or perhaps you haven’t been clear that it is your right to determine whether to continue. Or something else.
You are not obligated to be your former therapist’s friend, regardless of her feelings about it. It is enough to thank her for her support if you want to and to bring the relationship to closure.
I wish you well.