How can I update to latest firmware and what would I lose?

Jailbreak is not for everyone, thus why you would want to go back to retail and PSN access.
Note that while updating you will NOT be able to downgrade ONLY IF you made a backup of sflash, syscon, HDD AND you are good at soldering!

What would I lose and what can I still carry over?

We do NOT know what Sony might see when you update, so risk of ban is currently unknown, thus it is recommended to reinitialize and/or wipe your HDD before updating.
As such, no matter if you do initialize or not, you will lose access to:
- Launching/opening all your fpkg games and apps.
- Applying all your fpkg themes. If the themes are retail and have been unlocked via a unlocker only the current applied theme will stay, rest won't be able to be applied anymore (only if you don't decide to initialize).
- All non-persistent tweaks and payloads.
- If you initialize, trophies will also be removed. Note that trophies unlocked via trophy unlockers are very risky, and NOT recommended if you do not wish to initialize.
- Access to Linux.
However some can be carried over, such as:
- Saves. You can carry over saves, if being backed up via save data management. For this to work, you NEED a offline activated account with SAME account ID as your PSN one and to make sure your games have the same CUSA ID as your owned games . For CUSA ID you can convert region in the linked guide under "Managing save files from different CUSA IDs".
- If you do not wish to initialize, trophies. Note that trophies unlocked via trophy unlockers are very risky, and NOT recommended if you do not wish to initialize.
- If you do not wish to initialize, only the current retail theme unlocked via theme unlocker.

Backup your saves via Save Data Management in PS4's Settings.
Download firmware file on your PC by visiting the following site (do not get PS4 console update file - get PS4 console reinstallation file)
- PS4 Firmware
Prepare a USB stick drive by formatting it to FAT32 and creating a folder on the root of the drive named PS4 and another folder inside PS4 named UPDATE. Copy PS4UPDATE.pup in the UPDATE folder.
Final structure should look like this: PS4 > UPDATE > PS4UPDATE.pup
Boot into PS4’s recovery settings by turning off the PS4 and holding the PS4 button until it beeps 2 times.
Plug the USB stick into an empty slot on your PS4.
Select 7. Initialize PS4 (Reinstall System Software) > OK > Yes.
The PS4 will now install the firmware and remove everything on the HDD.
Done. You can now visit Sava Data Management and restore your saves if you did a backup before.

Download firmware file on your PC by visiting the following site (do not get PS4 console reinstallation file - get PS4 console update file)
PS4 Firmware
Prepare a USB stick drive by formatting it to FAT32 and creating a folder on the root of the drive named PS4 and another folder inside PS4 named UPDATE. Copy PS4UPDATE.pup in the UPDATE folder.
Final structure should look like this: PS4 > UPDATE > PS4UPDATE.pup
Boot into PS4’s recovery settings by turning off the PS4 and holding the PS4 button until it beeps 2 times.
Plug the USB stick into an empty slot on your PS4.
Select 3. Update System Software > 1. Update from USB Storage Device > OK > Update.
The PS4 will now install the firmware while keeping everything on the HDD.
Done.