Here is what I do.
I run two libraries. I pay for 200GB of iCloud, and have a "main" library holding all my recents, that is synced with iCloud and resides on my system drive. All these photos are available on all my devices. Currently I have a year of photographs there, taking up about 1/4 of my iCloud space.
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. The main library is 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 separtely 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).
Tony (in cold, wet UK :-) )
**The external storage must be formatted APFS or MacOS extended (journaled), and not be (or have been) used for time machine. It must have the 'ignore ownership" checkbox ticked. It should not be on a memory stick, SD or similar. It stands to reason that if you want any sort of reasonable performance it should be a fast drive with a fast connection.
See
https://support.apple.com/en-gb/HT201517