You don't have to do anything. You can choose to not upgrade (no harm in that), or you can choose to upgrade to Lightroom 6/Lightroom CC if you want (this requires you pay for the upgrade, or use the 30-day free trial and pay after that)
It is unfortunate that Adobe has chosen to use the work "update" in the notice inside LR 5. It is not an "update". It is an "upgrade". As such you have to pay if you want it. Also as usual Adobe steers customers toward the CC solution and makes the perpetual license option hard to find.