How to install System update with custom recovery

I have a Nexus 5 running Android 5.1.1, rooted and with TWRP 2.8.7.1 recovery. Yesterday I received a "System update downloaded" notification, and when I clicked on Restart & Install, it booted to TWRP. I didn't know what to do, so I just booted to system. The "System update downloaded" notification appeared again, which tells me the update was not installed.

How can I install this system update?