If you want to just disable the notification, open the notification drawer, tap and hold the notification so it goes Black with a certain app name and an "i" at the end. Press that "i" and uncheck "Show Notifications" This will result in you not getting any notification from that app.
It's highly recommended that you update, so... to update, you need:
- An Unmodified System (You can't have root)
- Stock Recovery
I updated my (rooted) Nexus to Android 5 by unrooting via SuperSU, Flashing Stock Recovery, and Updating.
This may or may not work so the best way to update is to take a backup of your data, download the factory image from google and flashing it.
Flashing Stock Recovery
Android is designed to rewrite the recovery partition with stock recovery upon each boot, but installing a Custom Recovery patches the OS so it won't happen. If you deleted your recovery, meaning you no longer have a recovery, stock or otherwise, You might as well flash the update from a stock image. The Android Stock recovery screen is a dead android with an exclamation mark and might mislead you into thinking there's no recovery.
TL;DR: If you want to update, backup your apps and data, download the latest factory image from here and flash it.