This usually happens when you are trying to change a password while the root filesystem (or wherever /etc is) is mounted read-only, for example when you booted up using the init trick, or in some maintenance mode (runlevel, usually).
You can mount a filesystem read-write using:
(This can also be useful to remember for remounting read-only, using remount,ro, when you want to fsck a filesystem and the relevant fscker requires the filesystem being read-only)