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Update Apple ID Settings (iOS) – Enter Mac Password “Enter the Password you use to unlock the Mac” with correct password reports “Incorrect Password”

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On my iPhone (iOS 15.5), the Settings app displays a notification “Update Apple ID Settings”.

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When I open it, I get informed that “Some account services will not be available until you sign in again”.

"Some account services will not be available until you sign in again"

When I tap to Continue, first I get requested to enter my Apple ID Password:

Enter Apple ID Password

Then I get requested to enter my iPhone Passcode:

Enter iPhone Passcode

Finally I get a prompt to enter my Mac Password:

Enter Mac Password

… and this is where the process seems to fail for me…

The dialog reports Incorrect Password, while I'm convinced that I entered my Mac password correctly. Yes, I already retried several times. I also tried with my previous Mac password, but it did not help.

Enter Mac Password: Incorrect Password

I do want the end-to-end encryption to continue working between my devices – how can I get rid of this nagging “Update Apple ID Settings” notification?

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