The WordPress core software is actively developed by thousands of open-source contributors from all over the world.
Every day, they are striving to rollout:
So, it is important that you update the WordPress core to avoid being hacked or to not miss out on a better WordPress website.
Having said that, make sure your active theme and active plugins are compatible with the latest version of WordPress core software.
Test out the compatibility on a staging site.
If they are throwing any errors, wait until the theme and plugins become compatible with the latest version of WordPress core.
Popular plugins and themes are mostly up-to-date with WordPress core. So no worries there!
The problem is actually with themes and plugins that are not being actively maintained by the developer.
So, keep an eye on them.
P.S. WordPress core software always try to take advantage of the latest version of PHP. So, in most cases, it is compatible with the latest version of PHP. So, you don’t have to worry about it.