Do you just open the new update with the old one still installed or do you have to remove the old one first?

CC has consistently recommended that you uninstall the old version first, to make sure you get a clean install.
You can install over the old one though. Being either lazy or impatient, I always do, and I never had any problems. There is likely to 'always be a first time', I suppose...

So if you uninstall the previous version do you still keep all your previous files? I would hate to lose what I've already made.

Your data files should not be affected by the uninstall/reinstall process. Always keep backups, though!
I try to remember to do daily backups to a USB stick.
Thanks for the keyboard!

You are most welcome