In case anyone still gets this error message after following the advice to check the File > Project Structure -> Project and set appropriate Project language level.
Be sure to also check File > Project Structure> Modules, to see if all your modules are on the correct Language Level: (or the specific desired level).
There is also one more place where this can go wrong, which is: File > Settings > Compiler > Java Compiler. There you can set the project and module's java compiler version.
(For IntelliJ version <= 12 : Project Structure => Project Settings)