I changed the settings to Java 8 as advised above...->Default Project Structure.
It did'nt work!!
I continued not being able to write Lambda's in the editor without errors.
When I created the project, I chose Gradle as the build tool.
For some reason my Java/Gradle project had the source compatibility in the build.gradle file set to 1.5 (maybe because my default was originally set to 1.5...I don't know as I did not bother to reproduce it):
apply plugin: 'java'
sourceCompatibility = 1.5
repositories {
mavenCentral()
}
Changing the sourceCompatibility to 1.8 solved the problem, since the update to the gradle file also triggers a project build.
Word to the wise:
any newbie on Intelij should remember that not selecting either Maven
or Gradle in conjunction with your Java project creation will not setup the
default package (src/main/test and src/main/java) structures necessary;
for eclipse users this is a real head scratcher when first starting to
use Intelij.