All male racers start as category 5. Women start as cat 4. Bigger races will sometimes split the categories up in to age groups too (e.g. they might have a cat 5 field, and a cat 5 35+ field), but in any case, you typically won't have much of a decision to make there - it is whatever the promoter offers.

The best way to know if you're fast enough is to just go race. If you try and you find you're not fast enough, it's not the end of the world - you just know you've got some work to do before your next race. Go for it.