The literal translation might be "he/she is living in a bubble," but I would say that we often say, "he/she sees life through rose-colored glasses" (only sees things in a positive light) or "he/she is out of touch [with reality]" (in the pejorative sense). For being spoiled, we also say "he/she was born with a silver spoon in his/her mouth" (never worked hard in his/her life).