this apple watch requires a newer version of iOS - new series 7 watch will not pair

Just received my new series 7 GPS Apple Watch. Unfortunately, I am unable to pair due to the watch message of "this apple watch requires a newer version of iOS". I have the latest iOS version (14.8). Restarted my iPhone 12 Pro Max and the new watch multiple times, has not resolved. Help!

I even tried to update to iOS 15, but that won't work for some reason, and I hear it is problematic anyway so I would rather not.