How to archive older photos to de-clutter photos library and take up less icloud space

Or you can do what I've done:

I run two libraries. I pay for 200GB of iCloud, and have a "main" library holding all my recent photos, that is synced with iCloud and resides on my system drive. All these photos are available on all my devices. Currently I have 1 1/2 years of photographs there, taking up less than half of my iCloud space. (This dual library strategy is equally valid if you don't use iCloud but just want a smaller local library stored on your mac)

I also have an archive library which holds everything older. It is on a separate drive (correctly formatted and prepared - see link below). I use powerphotos to periodically copy photos from my main library to my archive library.

I am very very rigorous about backups. Both libraries are backed up to time machine. In addition both libraries are regularly copied to a second external drive. Finally I periodically export all original images (so that I have the actual image files separately from the photos library) and copy those to a network drive backup. I have a copy of these stored away from home also (mitigate risk of fire/theft).

The last time I was faced with this problem, I made a new photos library and created a 'historical photos library' out of the photos I no longer needed immediate access to.

That's pretty much how you do it. There is no magic formula. You can do it with Photos or some other app, but it's basically the same. Why did you find it precarious in the past?

You only need two: One for regular use and the archive one. You don't have to keep creating new ones. just update the archive.