Error:java: invalid source release: 8 in Intellij. What does it mean?

Im trying to compile some code in I’m using Intellij Ultimate 13.1.4, but I get the following error and I have no idea what it means:

Information:Using javac 1.7.0_55 to compile java sources
Information:java: Errors occurred while compiling module 'Example'
Information:Compilation completed with 1 error and 0 warnings in 3 sec
Information:1 error
Information:0 warnings
Error:java: invalid source release: 8

My guess is that its something related to Java 8 vs Java 7, but I have no idea what specifically. I’ve tried to Google around for this message, but they either talk about javac or target release, so it doesn’t exactly seem to apply.

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