Great question, it's something we have just implemented.
Say for example, you wanted to implement the following retention policy:
Daily – 1 week = 5 backups
Weekly - every 1 month = 2 backups
Monthly – every 1 year = 12 backups
The way to do it is to have 3 x Schedules as described above and then create 3 x 'Amazon - Delete Snapshot By Tag' tasks.
For each 'Amazon - Delete Snapshot By Tag' task, the Tag Value will be the name of the corresponding Schedule. Eg, to Delete the 'Daily' snapshots, the Tag Value will be 'Daily' (matching the name of the Schedule used to create the snapshots) and the days to keep will be 5.
We achieve this by adding a tag to each snapshot we create with the name of the Schedule we use to create it.
You would then follow a similar setup for your Weekly and Monthly backups.