I got that same warning a few days ago and took the "Later" option because I didn't want to fool o with it at the time. "Later'" has not recurred and I am assuming the whole thing was a glitch in the iCloud software. Because of the password issue I am guessing it was in the password server. If I were you I would taste the "Leter" option and forget about it.
"Later" was the first thing I chose but my experience is different than yours. In my case, "Later" appears actually to be "Not Long From Now" and the original dialogue box pops up continually…i.e. being a pain in the butt.
Ergo, my wish to be done with it once and for all.
