I received my own disability in 2009 at age 57. In 2012, I applied for and received reduced divorced widow benefit at the age of 60. I reach my FRA, 66, this month, March 2018. SSA just sent me a letter notifying me that my survivor amount will increase beginning in March by $318 per month. Does this mean the 28.5% reduction I had been receiving no longer applies after FRA? Is this because I took this at age 60? Is there an option available to me to maximize my benefit at age 70? Will Social Security inform me of maximum benefit options?
Yes, it sounds like the increase referenced is due to removal of the 28.5% reduction that previously applied as a result of your filing for your survivor benefits at age 60. That reduction for age is removed at full retirement age (FRA) if you were already drawing disability benefits on your own record (SSDI) when you became entitled to the reduced survivor benefit per section C.3 of the following reference from Social Security's operations manual (https://secure.ssa.gov/apps10/poms.nsf/lnx/0300615350).
Social Security doesn't normally notify someone of their maximum benefit options, but unless you could potentially qualify for higher benefits on a different spouse's record it sounds like you are already set to receive the most that you can get from Social Security. In theory you could suspend your own benefits until age 70 to increase your own retirement benefit rate by up to 32%, but that increase would then be subtracted from your survivor benefit. Furthermore, you couldn't be paid any survivor benefits while your own benefits are suspended, so you would almost certainly just be losing up to 4 years of benefits for no net gain.