The lyrics of the song are intended to be "treated with a light irony", as noted by Record World (June 10, 1978) when the single was released. So, there may be a sense of both things being true. Walsh knows he is living this extravagant life (doing lots of cocaine) and there are people mooching off this, but he is still just a musician.
Walsh explained the song verse by verse during a set at the Troubadour. The general theme being he mixed the song from a bunch of different parts and that lyrics are generally true (e.g., he did tear up hotel rooms, he did own a Maserati).
However, when getting to the final verse he wraps it up pretty quick saying:
A lot of non-musical stuff comes along with success. So that's 'Life's been Good' in nutshell. Everybody thinks I knew what I was doing. I didn't have a clue. It's all in different keys. It's all in bits and pieces.
A lot was going on in Joe's life around that time, he lost his three-year-old daughter in a car crash in 1974 and was going through a divorce by 1978. It isn't hard to imagine a man thinking that world and people around him are changing in a way he not does like, but also is not in a frame of mind to fully take accountability for his own role in the outcome.
